Study guide
3.2 Arkansas Liability Insurance
Arkansas Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
3.2 Arkansas Liability Insurance
Key Takeaways Explain This Topic AI
Commercial General Liability (CGL) Coverage A pays bodily injury and property damage; Coverage B pays personal and advertising injury; Coverage C pays no-fault medical payments.
The duty to defend is broader than the duty to indemnify — an insurer must defend any suit that could possibly fall within coverage.
The ISO CGL is offered on an occurrence form (injury during the policy period) and a claims-made form (claim first made during the period, governed by the retroactive date).
Professional liability (errors and omissions) covers economic harm from professional services and is excluded by the CGL.
Umbrella/excess policies sit above underlying CGL, auto, and employers liability limits and can drop down to fill gaps.
Last updated: June 2026
Commercial General Liability (CGL): Three Coverages
The ISO Commercial General Liability (CGL) policy is the backbone of business liability. It has three insuring agreements:
Coverage Insures Examples
A - Bodily Injury & Property Damage Third-party BI/PD the insured is legally liable for Customer slips in store; sign falls on a car
B - Personal & Advertising Injury Offenses, not physical injury Libel, slander, false arrest, malicious prosecution, wrongful eviction, copyright infringement in advertising
C - Medical Payments Small medical bills regardless of fault $5,000-$10,000 goodwill payment to an injured visitor
Defense costs under Coverage A/B are paid in addition to the limits — a defining CGL feature. Once the policy limit is exhausted by settlements/judgments, the duty to defend ends.
Duty to Defend vs. Duty to Indemnify
This distinction is heavily tested in Arkansas:
Duty to defend is broader . The insurer must provide a defense if the allegations could possibly fall within coverage, even if the suit is groundless, false, or fraudulent.
Duty to indemnify is narrower . The insurer only pays a covered judgment or settlement once liability is actually established.
Arkansas courts apply the "eight corners" rule — compare the four corners of the complaint against the four corners of the policy. If any covered allegation appears, the insurer must defend.
Occurrence vs. Claims-Made Triggers
- Trigger Covered when Key feature
- Occurrence form Injury/damage happens during the policy period Responds even if the claim is filed years later
Claims-made form Claim is first made during the policy period Governed by a retroactive date ; injuries before it are excluded
When a claims-made policy is non-renewed, the insured buys tail coverage (an Extended Reporting Period) to cover claims reported after expiration for prior acts. A new claims-made policy may instead grant nose coverage (a prior-acts/retroactive date).
Who Is an Insured
The CGL automatically insures the named insured plus, depending on entity type, members/managers (LLC), partners (partnership), executive officers and stockholders (corporation), and employees acting within the scope of employment. Additional insureds (landlords, contractors) are added by endorsement and are key in contract scenarios.
Professional Liability (Errors & Omissions)
The CGL excludes liability arising from rendering or failing to render professional services . Therefore accountants, agents, lawyers, architects, and medical providers need separate professional liability / E&O coverage. It responds to economic loss from negligent advice or service , not just physical injury, and is almost always written claims-made with a retroactive date.
Umbrella and Excess Liability
An umbrella policy provides limits above underlying CGL, business auto, and employers liability (workers' comp Part B).
Excess function : pays after the underlying limit is exhausted.
Drop-down function : covers some claims the underlying policy excludes, subject to a self-insured retention (SIR) (often $10,000-$25,000) the insured pays first.
Requires the insured to maintain stated underlying limits or the umbrella treats the gap as self-insured.
Key CGL Exclusions
The exam tests the major CGL exclusions because they decide whether a claim is covered at all. The standard ISO CGL excludes:
Expected or intended injury — harm the insured meant to cause (with a self-defense exception for bodily injury).
Contractual liability — liability the insured assumes by contract, except an "insured contract" or liability the insured would have anyway.
Workers' compensation and employers liability — injuries to the insured's own employees belong under workers' comp, not the CGL.
Auto, aircraft, and watercraft — covered by separate auto/aviation/marine policies.
Pollution — the broad absolute-pollution exclusion.
Damage to your own product / your work / impaired property — the "business risk" exclusions; the CGL is not a warranty on the insured's own work.
When a scenario names an injured employee , the answer is workers' compensation, not the CGL — that is one of the most repeated trap setups.
Employers Liability (Workers' Comp Part Two)
The employers liability portion (Part Two of the workers' compensation policy) fills the gap the CGL employee exclusion leaves. It pays for employee-injury suits that fall outside the exclusive remedy of workers' comp — for example, third-party-over actions, consequential injury to a family member, or dual-capacity claims. It does not pay scheduled comp benefits; those come from Part One. On the exam, distinguish Part One (statutory comp benefits, no dollar limit) from Part Two (liability suits, with stated limits such as $100,000/$500,000/$100,000).
Limits: Per-Occurrence vs. Aggregate
The CGL contains layered limits a producer must explain to a business client:
- Limit What it caps
- Each Occurrence Most paid for any single occurrence (BI + PD combined)
- General Aggregate Most paid for all occurrences in the policy year (except products-completed)
- Products-Completed Operations Aggregate Separate annual cap for product/completed-work claims
- Personal & Advertising Injury Per-person/organization cap under Coverage B
- Damage to Premises Rented Sub-limit for fire/explosion to rented space
- Medical Payments Per-person cap under Coverage C
Because defense costs are paid outside the limits, an insured can exhaust the policy limit through judgments while the insurer still funds the defense up to that point — but once limits are paid out, the defense duty ends.
Exam Tip : When a scenario asks where a claim belongs, ask four questions in order: (1) Who is the injured party? (2) What act caused the harm? (3) Was the policy trigger met (occurrence date or claim date vs. retroactive date)? (4) Does an exclusion apply? Professional acts go to E&O, advertising offenses to CGL Coverage B, employee injuries to workers' comp, and amounts above underlying limits to the umbrella.