3.1 Arkansas Auto Insurance Requirements

Minimum Financial Responsibility: 25/50/25

Arkansas Code 27-19-713 sets the minimum liability limits every private passenger auto policy must provide. On the exam these are tested as the three-number shorthand "25/50/25."

These limits have not changed for 2026. A common distractor is 15/30/10 or 20/40/15 — those belong to other states. Liability pays for damage the insured causes to others; it never pays for the insured's own car (that is collision/comprehensive, which are optional).

Mandatory Offers: UM and PIP

Arkansas does not make UM and PIP purely optional; insurers must offer them, and they attach automatically unless the insured rejects them in writing.

Uninsured/Underinsured Motorist (UM/UIM)

• Bodily Injury UM is required to be offered at limits equal to the liability limits.
• Pays when the at-fault driver has no insurance, too little, or flees (hit-and-run).
• A written rejection is needed to drop or reduce it.

Personal Injury Protection (PIP) — "no-fault medical"

Arkansas PIP is add-on, not true no-fault — the insured keeps the right to sue. Minimum PIP components Arkansas insurers must offer:

PIP pays the insured and passengers regardless of fault. The exam loves this trap: PIP medical is rejectable in writing, but if not rejected it is primary for the insured's own injuries.

Tort System and Comparative Fault

Arkansas is a tort (at-fault) state — the at-fault driver's insurer pays the injured party. It applies modified comparative fault with a 50% bar (Ark. Code 16-64-122): a claimant who is 50% or more at fault recovers nothing; below 50%, recovery is reduced by the claimant's fault percentage.

• Example: $40,000 in damages, claimant 20% at fault -> recovers $32,000.
• Example: $40,000 in damages, claimant 50% at fault -> recovers $0.

Proof of Coverage and OIVS

• Drivers must carry proof (paper or electronic phone display) and show it on demand.
• Arkansas runs an Online Insurance Verification System (OIVS); insurers report active policies so police and the DMV can confirm coverage instantly.
• A lapse flagged by OIVS can suspend the registration, not just charge a fine.

Penalties for Driving Uninsured

A serious violation can require an SR-22 — a certificate the insurer files with the state proving the driver carries at least minimum coverage, typically for 3 years.

Underinsured Motorist (UIM) and Stacking

Arkansas treats Underinsured Motorist (UIM) as a distinct coverage that the insurer must also offer. UIM applies when the at-fault driver carries liability limits lower than the injured insured's damages but is not entirely uninsured. For example, if an insured suffers $80,000 in injuries and the at-fault driver carries only the 25/50/25 minimum, the insured's $50,000 UIM limit can fill part of the shortfall after the at-fault insurer pays its $25,000. Like UM and PIP, UIM is included unless rejected in writing, and the rejection must be a knowing, documented choice retained in the insurer's file.

Optional First-Party Coverages

Liability, UM, and PIP protect people; the insured's own vehicle is covered only by optional physical damage coverages a producer should explain:

• Collision: pays for damage to the insured's car from impact, regardless of fault, subject to a deductible (commonly $250-$1,000).
• Comprehensive (other than collision): pays for theft, fire, hail, flood, glass breakage, vandalism, and animal strikes.
• Lenders almost always require both collision and comprehensive on financed vehicles; this is a frequent producer-duty scenario on the exam.

Neither collision nor comprehensive is mandated by Arkansas law, so a driver can legally carry only 25/50/25 liability and have no protection for their own car. A producer who fails to explain this gap to a financing customer creates an errors-and-omissions exposure.

Producer and Cancellation Rules

Arkansas regulates how auto policies start and end. A new auto policy may be canceled for any lawful reason within the first 60 days (the underwriting period). After 60 days, mid-term cancellation is limited to specific grounds such as nonpayment of premium, license suspension of the named insured or a regular operator, or material misrepresentation. The insurer must mail advance written notice — generally at least 20 days, or 10 days for nonpayment. Nonrenewal also requires advance notice so the insured can find replacement coverage.

These notice timeframes are heavily tested; pair "60-day underwriting window" with the 20-day/10-day notice split.

Exam Tip: Memorize 25/50/25, and remember UM, UIM, and PIP are mandatory offers that attach unless rejected in writing. "Optional" is the wrong word for AR UM/PIP — collision and comprehensive are the truly optional first-party coverages.