Free Property Insurance Basics Study Guide
Arkansas Property exam — Property Insurance Basics.
Property insurance principles (perils, hazards, ACV versus replacement cost, coinsurance, other-insurance clauses) are covered in the national guide. Arkansas adds statutory definitions, the valued policy law, minimum standards for commercial policies, and claim-handling rules under Rule 43.
Definitions
- Property insurance covers real or personal property against loss or damage from any hazard, including consequential loss. It does not cover noncontractual legal liability for the loss (Ark. Code 23-62-104). Lost business income that follows physical damage is a consequential (indirect) loss.
- Marine insurance covers the risks of navigation, transit, or transportation, including war risks (23-62-107).
Valued policy law (23-88-101)
- When insured real property is totally destroyed by fire or natural disaster, the insurer owes the full amount stated in the policy.
- On a commercial policy, the payment is reduced by the deductible or retention.
- The law does not apply to:
- flood or earthquake policies
- personal property or detached structures
- buildings insured at completed value under a builder's risk policy
- losses the insured caused by a crime or fraud
- Blanket policies are also excluded. The initial payment is instead the value assigned to the building for rating.
Commercial property policy standards (23-79-301 and -307)
These minimum standards apply to commercial property and casualty policies, except those issued by surplus lines insurers:
| Rule | Requirement |
|---|---|
| Nonrenewal | Written notice at least 60 days before expiration, except for nonpayment |
| Rate-driven renewal increase of 25% or more | Notice to the agent at least 60 days and to the insured at least 30 days before renewal (Act 22 of 2025) |
| Multi-year policy with annual premium adjustments | Premium notice at least 30 days before each anniversary |
| Coverage-restricting endorsement added mid-term without the insured's request | Must be accepted and signed by the named insured |
Claims handling (Rule 43)
| Step | Deadline |
|---|---|
| Acknowledge a claim | 15 working days |
| Furnish proof-of-loss forms | 20 calendar days, or the insurer waives proof of loss |
| Complete the investigation | 45 calendar days |
| Accept or deny after proof of loss | 15 working days, in writing, citing any exclusion relied on |
| Mail payment once the claim is ready | 10 working days |
Other Rule 43 rules:
- A release a first-party claimant signs may not extend beyond the subject of the claim payment.
- The insurer may not require the claimant to calculate depreciation on a proof-of-loss form.
Common exam traps
- Arkansas's definition of property insurance includes consequential loss.
- The valued policy law applies to real property totally destroyed by fire or natural disaster.
- Commercial nonrenewal notice is 60 days. Surplus lines policies are exempt from the commercial standards.
- If proof-of-loss forms aren't sent within 20 days, the proof requirement is waived.
Practice Property Insurance Basics questions All Property topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
