Arkansas Personal Lines Insurance License Exam — All Questions

What are the minimum auto liability limits a personal auto policy must carry to satisfy Arkansas's financial-responsibility law?

• a.$50,000 per person / $100,000 per accident bodily injury and $50,000 property damage
• b.$15,000 per person / $30,000 per accident bodily injury and $5,000 property damage
• c.$25,000 per person / $50,000 per accident bodily injury and $25,000 property damage✓
• d.$30,000 per person / $60,000 per accident bodily injury and $25,000 property damage

Arkansas sets minimum auto liability limits of 25/50/25 — that is, $25,000 per person / $50,000 per accident for bodily injury, and $25,000 for property damage. Producers should quote at least these limits and offer higher coverage. Source: Arkansas DOI (https://insurance.arkansas.gov/). Verify current figures with the Arkansas DOI before advising a client.

How does Arkansas handle liability for auto accidents?

• a.It is a traditional at-fault (tort) state; the at-fault driver is responsible for the other party's injuries and damage✓
• b.It is an add-on no-fault state requiring mandatory PIP on every policy
• c.It bars all lawsuits between drivers and routes claims through a state fund
• d.It is a pure no-fault state; each driver's own insurer pays regardless of fault

Arkansas is a traditional at-fault (tort) state: the driver responsible for a crash is liable for the other party's injuries and property damage, which is why liability limits matter. It does not use a no-fault/PIP system. Source: Arkansas DOI (https://insurance.arkansas.gov/).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in Arkansas?

• a.State law limits the reasons an insurer may cancel or nonrenew and requires advance written notice to the insured; confirm the exact notice period with the Arkansas Insurance Department✓
• b.There are no notice rules; cancellation is governed solely by the contract
• c.An insurer may cancel any personal policy at any time for any reason with no notice
• d.Only the policyholder may ever cancel; insurers can never cancel mid-term

Arkansas, like other states, restricts mid-term cancellation of personal auto and homeowners policies to specified reasons (such as nonpayment or material misrepresentation) and requires advance written notice of cancellation or nonrenewal. The exact number of days varies by reason and line — verify the current Arkansas notice periods with the Arkansas Insurance Department.

With respect to uninsured/underinsured motorist (UM/UIM) coverage on a Arkansas personal auto policy, which is generally true?

• a.UM/UIM is prohibited in the state
• b.UM/UIM automatically replaces liability coverage
• c.UM/UIM is only available to commercial fleets
• d.Insurers must make UM/UIM coverage available; the insured may typically accept, reject, or adjust it in writing✓

State auto laws generally require insurers to offer uninsured/underinsured motorist coverage; the applicant may accept it or reject/adjust it, often with a signed election. UM/UIM protects the insured when the at-fault driver has no or insufficient coverage — important in an at-fault state like Arkansas. Confirm the current UM/UIM rules with the Arkansas Insurance Department.

Which best describes the body that writes and enforces Arkansas's insurance regulations affecting personal lines policies?

• a.The federal Department of Insurance in Washington, D.C.
• b.A private trade association of insurers with no government authority
• c.The county clerk's office where the policy is issued
• d.The Arkansas Insurance Department, which sits within the Arkansas Department of Commerce✓

Insurance in Arkansas is regulated at the state level by the Arkansas Insurance Department. There is no federal department of insurance; each state (including Arkansas) supervises its own market, licenses producers, and enforces cancellation, rating, and coverage rules. Source: Arkansas DOI (https://insurance.arkansas.gov/).