The Personal Auto Policy form itself (Parts A through F, insureds, covered autos, and exclusions) is covered in the national guide. On the Arkansas Personal Lines exam, the state questions focus on the rules around the policy: comparative fault, compulsory 25/50/25 coverage, Arkansas's required first-party benefits, uninsured and underinsured motorist rules, and the limits on cancelling and nonrenewing an auto policy. This guide covers those rules with citations.

Fault: modified comparative fault

Arkansas is an at-fault (tort) state that applies modified comparative fault (Ark. Code 16-64-122):

• A claimant whose fault is less than the defendant's recovers damages reduced by the claimant's own percentage. A claimant 30% at fault with $100,000 in damages recovers $70,000.
• A claimant whose fault is equal to or greater than the defendant's recovers nothing from that defendant. At 50/50, the claimant gets nothing.
• "Fault" includes any act, omission, risk assumed, or breach of warranty or legal duty that is a proximate cause of the damage.

Compulsory insurance

• A vehicle may be operated in Arkansas only if it is covered by a liability policy or a certificate of self-insurance (27-22-104).
• Since Act 345 of 2025, the policy may come from an insurer authorized or eligible to do business in Arkansas, which includes surplus lines insurers.
• Minimum limits are 25/50/25: $25,000 bodily injury per person, $50,000 per accident, and $25,000 property damage (27-19-605).
• Proof of insurance may be shown on paper or electronically on a device. If a driver shows no proof and the online verification system shows no coverage, the vehicle is presumed uninsured, though the driver can rebut that.
• Penalties for driving uninsured (27-22-103):
  • first offense: a fine of $100 to $250
  • third or later offense: $500 to $1,000 and/or up to one year in jail

Proof of financial responsibility for the future. A driver required to file it can do so with a certificate of insurance filed with the Office of Driver Services (27-19-712). A certified policy must cover use in the United States and Canada. An operator's (nonowner) policy covers the named person driving any vehicle they don't own (27-19-713).

First-party "no-fault" benefits (23-89-202, -203)

Arkansas is an at-fault state, but every private passenger auto policy must include first-party benefits paid without regard to fault, unless the named insured rejects them in writing, in whole or in part:

These benefits supplement the tort system. They don't replace it.

Uninsured and underinsured motorist coverage

Uninsured motorist (UM) (23-89-401 to -404):

• Every auto liability policy on a vehicle registered or principally garaged in Arkansas must include UM coverage unless a named insured rejects it in writing.
• A rejection stays in effect until withdrawn in writing. The insurer need not re-offer at renewal.
• If the insured buys liability limits above the minimum, UM must be made available up to those limits.
• An "uninsured motor vehicle" includes one whose insurer can't pay because of insolvency.
• UM property damage carries a $200 deductible. The deductible doesn't apply when the uninsured driver is positively identified and solely at fault.
• UM property damage limits need not exceed the property damage liability limits bought. Property damage means damage to the insured vehicle plus a reasonable allowance for loss of use.

Underinsured motorist (UIM) (23-89-209):

• UIM must be offered, and the named insured may reject it in writing. It is available only together with UM.
• UIM pays when the at-fault driver's limits are less than the insured's damages.
• When the insured gives notice of a tentative settlement with the at-fault driver for that driver's limits, the UIM insurer has 30 days to pay that amount to preserve its subrogation rights.

Cancellation and nonrenewal

Cancellation reasons (23-89-303):

• During the first 60 days of a new policy, the reason restrictions don't apply.
• After that, an insurer may cancel only for:
  • nonpayment of premium
  • fraud or material misrepresentation
  • suspension or revocation of a driver's license or registration
  • specified convictions, such as driving while intoxicated or three speeding or reckless driving convictions during the policy period (including the three months before it began)
  • nonpayment of membership dues
• An insurer can't rescind BI and PD liability coverage, as to an injured third party, because of the insured's fraud or misrepresentation.

Cancellation notice (23-89-304):

A cancellation is not effective as to a named lienholder unless notice is sent to it.

Nonrenewal (23-89-305):

• The insurer sends a nonrenewal notice or a renewal offer at least 30 days before the term ends. This doesn't apply when the reason is nonpayment.
• The renewal notice goes to the insured, with written or electronic notice to the producer. It states the new premium and any change in deductibles or provisions.
• The grounds for nonrenewal are given on written request made at least 15 days before the nonrenewal takes effect.
• A cancellation (other than for nonpayment) or nonrenewal notice must mention possible assigned risk plan eligibility (23-89-307).

The general property and casualty cancellation statute (23-66-206(15)) does not apply to personal auto.

Residual market

Arkansas's automobile assigned risk plan must be joined by every licensed auto insurer (27-19-106). An applicant can appeal plan rulings to the Commissioner, who decides within 30 days after the transcript is submitted.

Auto claims (Rule 43, Section 10)

• Total loss. A cash settlement is based on the cost of a comparable vehicle, including taxes, license fees, and transfer fees, less the deductible.
• Repairs. The insurer may not require repairs at a particular shop.
• Third-party claims. When liability and damages are reasonably clear, the insurer may not push a third-party claimant to use their own policy.
• Subrogation. Subrogation demands must include the insured's deductible.
• Defense costs. Auto liability policies may not use defense-within-limits (23-79-307(a)(5)).

Common exam traps

• Arkansas is at-fault with modified comparative fault. At 50/50, the claimant recovers nothing.
• The minimums are 25/50/25.
• First-party no-fault benefits ($5,000 medical, 70% income up to $140 a week, $5,000 death) are included unless rejected in writing.
• UM is included unless rejected in writing. UIM must be offered and goes only with UM.
• Cancellation notice is 20 days, or 10 days for nonpayment. Nonrenewal notice is 30 days.
• Arkansas law refers to a certificate of insurance filed with the Office of Driver Services.