2.1 Arkansas Homeowners 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

2.1 Arkansas Homeowners Insurance

Key Takeaways Explain This Topic AI

The HO-3 Special Form insures the dwelling and other structures on an open-perils (all-risk) basis and personal property on a named-perils basis.

Coverage A drives the policy: Coverage B is 10% of A, Coverage C is 50% of A, and Coverage D is 30% of A under the ISO HO-3.

Arkansas Rule and Regulation 43 requires insurers to acknowledge a claim within 15 working days and supply proof-of-loss forms within 20 calendar days.

Flood and earth movement are excluded; flood must be bought through the NFIP or a private flood insurer.

An 80% replacement-cost provision must be met at the time of loss or partial losses are paid on a reduced (actual-cash-value-like) basis.

Last updated: June 2026

How Arkansas Writes Homeowners Coverage

Arkansas does not publish its own homeowners contract. Insurers file Insurance Services Office (ISO) forms with the Arkansas Insurance Department, then add state endorsements. On the Property & Casualty producer exam, roughly 100 of 125 scored questions cover this general national content and 25 cover the Arkansas state-specific section; you must reach 70% on each portion. So you must know the ISO forms cold, then layer Arkansas rules on top.

The Six Coverage Parts of an HO-3

The HO-3 Special Form is the most common policy. It insures Coverage A (Dwelling) and Coverage B (Other Structures) on an open-perils basis — covered unless excluded — and Coverage C (Personal Property) on a named-perils basis (16 listed perils).

• Part Coverage Basis Standard Limit
• A Dwelling Open perils Stated amount (e.g. $300,000)
• B Other Structures Open perils 10% of A
• C Personal Property Named perils 50% of A
• D Loss of Use n/a 30% of A
• E Personal Liability Occurrence $100,000 (raise to $300K–$500K)
• F Medical Payments to Others No-fault $1,000 per person

Trap: Coverage C limits of 50% of A and Coverage D of 30% of A are the ISO HO-3 defaults — exam options that say "75%" or "20%" are distractors unless an endorsement raised them.

The 80% Replacement-Cost Rule

For a partial dwelling loss to be paid at full replacement cost, the insured must carry at least 80% of the full replacement cost at the time of loss. If they carry less, the loss is paid by the larger of (a) actual cash value or (b) this formula:

Payment = (Carried / (0.80 × Replacement Cost)) × Loss − Deductible

Worked example: A home costs $400,000 to rebuild. The owner carries only $240,000. Required = 0.80 × $400,000 = $320,000. A $40,000 kitchen fire pays: ($240,000 / $320,000) × $40,000 = 0.75 × $40,000 = $30,000 , minus the deductible. The owner eats the $10,000 shortfall for under-insuring.

Standard Exclusions to Memorize

Flood — surface water and rising water; buy a separate National Flood Insurance Program (NFIP) or private flood policy.

Earth movement — earthquake, landslide, sinkhole; add by endorsement.

Ordinance or law — extra cost to rebuild to current code; add Coverage by endorsement.

Neglect, intentional acts, war, nuclear hazard, and wear/tear.

Exam Tip: When a scenario names a single peril, first ask whether the damaged item is the dwelling (open perils — covered unless excluded) or personal property (named perils — covered only if the peril is listed). A burst pipe damaging the structure is covered under A; mysterious disappearance of jewelry is not a named peril under C.

Arkansas Claims-Handling Rules (Rule and Regulation 43)

The Arkansas state section leans heavily on Rule and Regulation 43, Unfair Claims Settlement Practices . It sets minimum standards that, if violated with enough frequency to form a general business practice , become an unfair claims settlement practice. A single late letter is not a violation; a pattern is. Memorize these deadlines — they are favorite state-section items.

• Action Deadline Day Type
• Acknowledge receipt of a claim 15 working days
• Furnish proof-of-loss forms 20 calendar days
• Affirm or deny coverage after proof of loss 15 working days
• Status letter when investigation is incomplete every 45 calendar days

Note the working-days versus calendar-days distinction — exams love to swap them. Acknowledgment and the coverage decision run on working days ; proof-of-loss forms and the recurring status letters run on calendar days . If acknowledgment is made by phone rather than in writing, the insurer must note and date the acknowledgment in the claim file.

Other Arkansas Consumer Protections

Windstorm/hurricane disclosure: Percentage hurricane or named-storm deductibles must be disclosed clearly; the insured must be told how the percentage is applied (to Coverage A, not to the loss).

Cancellation and nonrenewal: A homeowners policy in force beyond the initial 60 days can generally be canceled mid-term only for nonpayment, material misrepresentation, or a substantial change in risk. Nonrenewal requires advance written notice.

Prompt-payment / interest: Once liability and amount are reasonably clear, the insurer must pay promptly; unreasonable delay can expose the insurer to a 12% penalty and attorney fees under Arkansas bad-faith and penalty statutes.

Putting It Together — A Scenario

A Little Rock homeowner reports straight-line wind damage on March 1. The insurer must acknowledge by roughly March 22 (15 working days), send proof-of-loss forms by March 21 (20 calendar days), and after receiving completed proofs either pay or deny within 15 working days. If the adjuster needs more time, a status letter goes out at day 45 and every 45 calendar days thereafter. Wind is a covered peril under the HO-3 open-perils dwelling coverage, so the analysis turns on the deductible and the deadlines, not on whether wind is covered.

Exam Tip: When a state-section question gives you a date and asks "by when must the insurer act," identify which Rule 43 deadline applies, then check working versus calendar days. That two-step is the most common Arkansas property trap.