Study guide
1.3 Arkansas Producer Responsibilities
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
1.3 Arkansas Producer Responsibilities
Key Takeaways Explain This Topic AI
Producers hold a fiduciary duty over premiums and client funds, which must be segregated and remitted, never commingled or converted.
Arkansas's Unfair Trade Practices Act bars misrepresentation, twisting, churning, defamation, and unfair claim settlement.
Rebating — giving any valuable consideration not stated in the policy as an inducement to buy — is prohibited.
Producers must report administrative actions, criminal convictions, and address changes to AID within 30 days.
Violations can bring license suspension or revocation plus civil penalties up to $5,000 per willful violation under ACA 23-66-210.
Last updated: June 2026
Fiduciary Duty Over Funds
A producer who collects premiums holds those funds in a fiduciary capacity for the insurer and the insured. Arkansas requires that premium money be kept separate from personal or operating accounts and remitted promptly. Commingling (mixing client funds with the agency's own money) and conversion (using client funds for personal purposes) are serious violations that routinely lead to revocation and possible criminal referral.
The Unfair Trade Practices Act
Arkansas's Unfair and Deceptive Trade Practices provisions (ACA 23-66-201 et seq.) list prohibited conduct. Know these by definition, because the exam tests the difference between similar-sounding terms:
Practice Definition Typical penalty
Misrepresentation False or misleading statements about a policy's terms, benefits, or dividends Suspension / revocation
Twisting Using misrepresentation to induce a client to replace a policy (often between insurers) Revocation, fines
Churning Replacing a policy using values from the same insurer's existing policy to generate new commissions Revocation, fines
Rebating Offering any valuable consideration not specified in the policy to induce a purchase Revocation, fines
- Defamation False statements that injure another insurer or producer Fines, discipline
- Unfair discrimination Treating equal risks unequally without an actuarial basis Fines, discipline
Unfair claim settlement Misrepresenting facts, delaying, or lowballing claims as a general practice Fines, market-conduct action
Trap — twisting vs. churning: twisting persuades a client to switch to a new insurer via misrepresentation; churning recycles the same insurer's policy values. Both are illegal; the exam wants the correct label.
Rebating
Rebating is offering a client anything of value — cash, gifts above a nominal amount, free services, or sharing your commission — that is not written into the filed policy , to induce the sale. Arkansas prohibits it for both the producer who offers and the insured who knowingly accepts. Small advertising novelties of minimal value are generally allowed.
Reporting Obligations
Arkansas producers must notify AID, generally within 30 days , of:
- Any administrative action taken against the license in another state;
- Any criminal prosecution or conviction (felony or certain misdemeanors);
A change of legal name or address .
Record Keeping & Penalties
Producers should retain client and transaction records (applications, policies, premium and claim files, CE certificates) so they are available for a market-conduct examination . Under ACA 23-66-210 , the Commissioner may, after a hearing, impose civil penalties of up to $5,000 per willful violation (lower for non-willful) in addition to suspending or revoking the license.
Exam tip: When a scenario describes a producer keeping a client's premium check in a personal account 'just for a few days,' the violation is commingling/conversion of fiduciary funds , not merely poor recordkeeping.
Agency Law: How a Producer Binds the Insurer
A producer is an agent of the insurer , and the authority to act flows three ways. Express authority is spelled out in the agency contract. Implied authority is what is reasonably needed to carry out express duties (e.g., ordering supplies). Apparent authority arises when the insurer's conduct leads a reasonable insured to believe the producer can act — even if private instructions said otherwise. The exam loves apparent authority: if an insurer lets an agent keep using company forms and binders, the insurer can be bound by the agent's acts toward an innocent third party.
- Authority type Source Example
- Express Written agency contract Bind auto coverage up to set limits
- Implied Reasonably necessary acts Collect premium, issue receipts
- Apparent Insurer's conduct/appearance Client reasonably relies on agent's binder
Because the producer represents the insurer, the producer's knowledge is generally imputed to the insurer . If an applicant tells the agent a material fact and the agent omits it from the application, the insurer is often charged with that knowledge.
Binders, Premium Trust, and the Application
A binder provides temporary coverage until the policy is issued or declined; an oral binder can be valid if the agent has binding authority. Premium collected belongs in a fiduciary/trust capacity — the producer must remit it to the insurer per the agency agreement and may not 'borrow' it. The producer must also complete the application accurately ; entering false answers (even to help a client qualify) is misrepresentation and can void coverage at claim time, harming the very client the producer meant to help.
Standard of Care and Errors & Omissions
Arkansas producers are held to the standard of a reasonably competent producer . Failing to procure requested coverage, letting a policy lapse, or misadvising on limits can create errors-and-omissions (E&O) liability. Producers carry E&O insurance for exactly these professional-negligence claims. This is a civil exposure separate from AID discipline; a single bad act can trigger both an E&O lawsuit and a regulatory penalty.
Worked Penalty Example
A producer willfully forges three signatures to issue policies and pocket commissions. Under ACA 23-66-210 , the Commissioner may impose up to $5,000 per willful violation — here up to $15,000 — plus revoke the license, and the forgery (a crime of dishonesty) triggers the federal 1033 bar from the industry. Notice how one course of conduct stacks state penalties, license loss, and federal disqualification.
Trap: 'Acting in good faith' does not excuse an unauthorized line, a rebate, or commingling — the conduct is judged by the act, not the producer's intent to help.