Study guide
3.3 Arkansas Workers' Compensation 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
3.3 Arkansas Workers' Compensation Insurance
Key Takeaways Explain This Topic AI
Arkansas requires workers' compensation for employers with 3 or more employees; the Arkansas Workers' Compensation Commission (AWCC) administers the program.
Benefits are no-fault: full medical, Temporary Total Disability (TTD) at 66 2/3% of average weekly wage, Permanent Partial Disability (PPD), Permanent Total Disability (PTD), and death benefits.
For 2026 the maximum weekly Total Disability rate is $953 and the maximum PPD rate is $715; non-scheduled awards cap at 450 weeks.
The exclusive remedy doctrine bars employees from suing the employer, but third-party suits and intentional-tort exceptions remain.
Coverage comes from private insurers, the NCCI-administered assigned risk pool, or AWCC-approved self-insurance — Arkansas has no state fund.
Last updated: June 2026
Mandatory Coverage Threshold
Arkansas requires workers' compensation for employers with 3 or more employees . This counts full-time, part-time, and seasonal workers, and agricultural employers reaching 3 employees.
Excluded / exempt from the count:
- Employers with fewer than 3 employees (may elect coverage voluntarily)
- Sole proprietors and partners (may elect in)
- Domestic servants in a private home
- Real estate agents paid solely by commission
- Certain agricultural farm-labor and family-member situations
Exam Tip : Arkansas's threshold is 3+ , not 1 or 5. "Three or more" is a high-frequency test point.
The Arkansas Workers' Compensation Commission (AWCC)
The AWCC administers the law and:
- Adjudicates disputed claims and holds hearings
- Approves and regulates self-insured employers
- Sets the medical fee schedule (caps provider charges)
- Enforces compliance and issues penalties
- Publishes the annual maximum benefit rates (effective each January 1)
- Coverage Options (No State Fund)
- Method When used Note
- Private insurance Most employers Premium = payroll x class rate x experience mod
- Assigned risk pool Rejected by voluntary market Serviced by NCCI ; higher cost
- Self-insurance Large, financially sound employers Needs AWCC approval, security deposit, TPA
Arkansas has no state-operated workers' comp fund (unlike Ohio or Washington). "State fund" is a classic wrong answer for AR coverage options.
- Benefit Structure
- Medical Benefits
All reasonable and necessary treatment, no deductible or co-pay to the employee.
Provider charges are capped by the AWCC fee schedule.
The employer/insurer directs the initial choice of physician; an employee may petition AWCC for a one-time change.
Temporary Total Disability (TTD)
Rate: 66 2/3% of the average weekly wage (AWW) .
2026 maximum: $953/week (85% of the state AWW).
7-day waiting period ; if disability extends beyond 14 days , the first 7 days are paid retroactively.
Continues until Maximum Medical Improvement (MMI) , return to work, or conversion to PPD/PTD.
Permanent Partial Disability (PPD)
Begins after MMI , based on an impairment rating .
2026 maximum PPD rate: $715/week (75% of the total-disability rate, capped).
Scheduled injuries (loss of a finger, hand, foot, eye, hearing) pay a fixed number of weeks from the statute.
Non-scheduled (body-as-a-whole) injuries cap at 450 weeks .
Worked example: a 10% whole-body rating -> 10% x 450 weeks = 45 weeks of PPD at the worker's rate (subject to the $715 cap).
Permanent Total Disability (PTD) and Death Benefits
Benefit Arkansas rule
PTD 66 2/3% of AWW; payable for the duration of disability; presumed for loss of both eyes, both hands, both feet, etc.
- Death - spouse 35% of AWW until death or remarriage (lump sum on remarriage)
- Death - spouse + children Up to a 66 2/3% combined family maximum
- Burial allowance Statutory funeral allowance (per AWCC schedule)
- Exclusive Remedy Doctrine
Workers' compensation is the employee's exclusive remedy : the worker cannot sue the employer for a job injury, even if the employer was negligent, in exchange for guaranteed no-fault benefits. This is the central trade-off of the system.
Exceptions where suit is still possible:
Intentional tort — the employer deliberately injured the worker.
Third-party liability — the worker may sue a negligent non-employer (e.g., equipment maker); the comp insurer holds subrogation rights against that recovery.
An employer who illegally fails to carry coverage loses exclusive-remedy protection and can be sued directly.
Compliance and Penalties
Report injuries to the insurer promptly (the first report of injury is filed without delay).
Post the workplace coverage notice; keep payroll records for audit.
Failure to carry coverage : civil penalty up to $10,000 , possible misdemeanor charges, stop-work orders , personal liability for all benefits, and loss of exclusive remedy.
Fraud (employee, employer, or premium): criminal prosecution, benefit forfeiture, and restitution.
How Premium Is Calculated
Workers' compensation premium is one of the most-tested rating topics. The base formula is straightforward:
Premium = (Payroll / 100) x Class Rate x Experience Modification Factor
Payroll is grouped by job classification code assigned by NCCI; a clerical worker carries a far lower rate than a roofer because of injury frequency and severity.
The experience modification factor ("mod") compares an employer's actual losses to expected losses for its class. A mod of 1.00 is average; below 1.00 earns a credit (good loss history), above 1.00 is a debit (poor history).
Premium is an estimate at policy inception based on projected payroll, then trued up at a final payroll audit at year-end. If actual payroll exceeded the estimate, the employer owes additional premium; if lower, the employer receives a return.
Worked example: a landscaping employer with $300,000 in covered payroll, a class rate of $6.00 per $100, and a mod of 1.15 pays roughly ($300,000 / 100) x $6.00 x 1.15 = $20,700 before taxes and assessments. Misclassifying payroll to a cheaper code to lower premium is premium fraud and is prosecutable.
Occupational Disease and Covered Injuries
Arkansas covers both sudden accidental injuries arising out of and in the course of employment and occupational diseases — illnesses caused by conditions characteristic of the job, such as hearing loss from sustained noise or respiratory disease from workplace dust. The injury must be the major cause of the disability under Arkansas law, and the claimant must prove the injury by objective medical findings, not merely by subjective complaints. Mental injury alone generally requires an accompanying physical injury. These causation rules separate compensable claims from non-work conditions and frequently appear in scenario questions.
Notice and Statute of Limitations
Deadlines are testable detail. The employee must give the employer notice of injury promptly. A claim for benefits must generally be filed with the AWCC within two years of the injury (or within one year of the last payment of compensation, whichever is later). Missing the limitation period can bar an otherwise valid claim, which is why early reporting protects the worker as much as the employer.
Return to Work and Subrogation Recovery
Arkansas encourages return to work . If the employee can perform lighter duties, the insurer may pay reduced benefits while the worker earns wages, and refusal of a bona-fide suitable job offer can suspend benefits. When a third party causes the injury, the comp insurer that paid benefits has a statutory lien/subrogation interest in the employee's recovery against that third party, so the worker cannot collect twice for the same loss. The insurer's lien is typically reduced by a share of the worker's attorney fees and costs.
Exam Tip : Anchor the three numbers for 2026 — 3+ employees to require coverage, 66 2/3% wage replacement, and the $953 TD / $715 PPD weekly maximums. Pair them with "no state fund," the two-year filing deadline, and the exclusive-remedy exceptions.
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