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What You Need to Know About Car Insurance in Arkansas

What you need to know about Car Insurance in Arkansas

car accident, auto accident, personal injury coverage
Are you covered? Car Insurance in Arkansas can be tricky to navigate, but remember: cheaper is not always better!

Like most Arkansans, you probably carry at least the minimum coverage required by law for your vehicle. But are you aware of the exact coverage and policy limits that come with your policy? Are you familiar with the legal implications of your policy should you end up in an accident? Car insurance in Arkansas can be confusing — especially when you’re weighing your monthly premium against your total protection.

How much do you really need?

The best time to learn about the different types of car insurance is before an accident happens.

When shopping for car insurance, always be cautious of discounts and savings until you know exactly what those “savings” are removing from your policy. Below are some explanations of different coverage options that a lot of people don’t add to their policies, because they think they’re saving money. Focusing only on saving money upfront will likely end up costing you much more in the long run if you are involved in a serious accident.

Personal Injury Coverage in Arkansas

While almost every state requires a minimum amount of insurance coverage, that minimal coverage is often not enough to cover the medical expenses you can incur from an auto accident involving personal injury. In Arkansas, the minimum allowable coverages are:

  • $25,000 per person for bodily injury or death in any one accident;
  • $50,000 per accident for bodily injury or death of two or more persons in any one accident; and
  • $25,000 for damage to or destruction of the property of others.

Let’s say you’re involved in an auto accident that isn’t your fault. You’re injured in the accident, and the person who caused the wreck — we’ll call him Bob the Bad Driver — carries minimum coverage.

Bob’s insurance company is only responsible for your medical expenses up to $25,000. If your hypothetical medical bills are $50,000 and you don’t have underinsured motorist (UIM) coverage on your auto insurance policy, then you’ll be on the hook for $25,000 for medical expenses from a wreck that you didn’t even cause.

In addition to that, you’re not eligible to receive compensation from Bob’s insurance company for pain and suffering. This is just one example of why it’s so important to know the different types of insurance coverages, like UIM. Along with UIM, some additional coverages to consider are uninsured motorist (UM), uninsured motorist property damage (UMPD), and personal injury protection (PIP).

Underinsured Motorist (UIM) Coverage

UIM coverage comes into play when the person who caused your auto accident does not carry sufficient insurance coverage to pay for all necessary medical expenses and other damages you incur. Simply put, UIM is the coverage you need to protect yourself in the event you are involved in an auto accident caused by someone with the minimum allowable coverage.

UIM is an optional coverage in Arkansas, and many people decline UIM because it adds to the premium on your policy. You may be surprised to learn that UIM and UM together typically only add between 5-10% to your total auto premium. For example, if your annual auto premium is $800, adding UIM and UM to your policy would approximately cost between $40 and $80 a year. This is a small price to pay for the peace of mind that you and your loved ones are covered in the event of a serious auto accident.

Uninsured Motorist (UM) Coverage

Uninsured Motorist (UM) coverage is similar to UIM, but it’s intended to protect you if you are involved in an auto accident caused by someone with no insurance whatsoever.

Even though a minimum amount of coverage is required by law, not everyone maintains insurance. Or they may mistakenly allow their policy to lapse. According to a 2017 study by the Insurance Research Council, Arkansas had the 9th highest rate of uninsured drivers in the United States at 16.6%.

If the person who causes your auto accident has no insurance policy, and you do not have UM, then there is no way for you to get compensation for your medical expenses and damages outside of filing a civil action in court against the at-fault party. Realistically, people who can’t afford to carry insurance on their vehicles typically do not have assets or money to collect on. So even if you receive a civil judgement against them, you’re still at square one.

Remember, UIM and UM together typically only add between 5-10% to your total auto premium. Since we live in a state with one of the highest rates of uninsured drivers, it would be wise to consider adding UM to your policy if you haven’t already done so.

Uninsured Motorist Property Damage (UMPD) Coverage

Uninsured Motorist Property Damage (UMPD) coverage is similar to UM, but it’s intended to cover damage to your vehicle (not you) if you are involved in an auto accident caused by someone with no insurance coverage.

UMPD may seem redundant when compared to your collision coverage but your UMPD deductible is typically much lower than your collision coverage deductible. For example, if you are involved in an accident caused by an uninsured driver and you have no UMPD, your only option for your property damage will be to file a claim under your collision coverage which may carry a deductible around $1,000.

However, in that same situation, if you had UMPD, then you could file a claim under your UMPD coverage with a smaller deductible such as $200. Because Arkansas has one of the highest rates of uninsured drivers, I strongly recommend you consider adding UMPD coverage to your auto policy.

Personal Injury Protection (PIP)

Personal Injury Protection (PIP) is a coverage option that covers medical expenses and, in most cases, lost wages — regardless of who is at fault for an auto accident. In Arkansas, you have three options for PIP, and you can choose to purchase one, two, or all of them together.

The first option is Medical Payments (sometime known as Med Pay), which provides compensation for doctor’s bills, X-rays, ambulance costs, and funeral expenses. PIP-Med Pay also covers medical payments for all passengers in your vehicle if they are injured in an accident.

The second option is Lost Wages, which covers lost wages with certain restrictions.

The third option is Death Benefits. This provides accidental death benefits should you or a loved one sustain injuries from an accident that result in death within one year of the accident. Each of these policies will provide you with a minimum of $5,000 in coverage. While Insurance companies are required to include minimum PIP coverage, you have the option to reject that coverage in writing. Another important aspect of PIP is that there is no deductible. So PIP payments are preferable over health insurance for some medical bills.

PIP coverage is comprehensive, and it doesn’t take into account who is at fault in an accident. That’s why it is always recommended that you carry PIP coverage on your auto insurance policy.

Car Insurance in Arkansas: The Bottom Line

UIM, UM, UMPD, and PIP are the coverage options intended to protect YOU. Without these, your insurance only covers medical costs for someone that you cause injury to in an auto accident.

Do you currently carry UIM, UM, UMPD, and PIP? If you don’t know, then it may be time to take a closer look at your auto policy. Make sure you are protected — before you need it. If you have any questions regarding your auto insurance coverage, contact me directly at kyle.lippard@danielsonlawfirm.com. Or call our Fayetteville law office at 479-935-8313.

Kyle Lippard

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Fayetteville Law Office

(479) 935-8313

909 Rolling Hills Dr.
Fayetteville, AR 72703

Booneville Law Office

(479) 935-8060

4 Village Loop
Booneville, AR 72927

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