Study guide
6.4 Part C Uninsured/Underinsured Motorists
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
6.4 Part C Uninsured/Underinsured Motorists
Key Takeaways Explain This Topic AI
Part C is first-party coverage that pays the insured's own bodily injury damages caused by an at-fault uninsured or underinsured motorist; the insured must be legally entitled to recover.
Uninsured covers no-insurance, insolvent-insurer, and hit-and-run drivers; underinsured covers at-fault drivers whose limits are too low to cover the insured's damages.
Under the difference-of-limits method, UIM fills the gap between proven damages and the liability amount already collected, up to the insured's UIM limit.
Insureds are you, family members, and other occupants of your covered auto; stacking (intra- or inter-policy) may be allowed or barred by state law and anti-stacking endorsements.
Traps: the at-fault party must be liable, your own uninsured owned auto is not a UM vehicle, UMPD is not universal, and Part C may be reduced by Part A/B or workers comp payments.
Last updated: June 2026
Part C - Uninsured and Underinsured Motorists
Part C pays the insured's own damages for bodily injury (and, in some states, property damage) caused by an uninsured (UM) or underinsured (UIM) motorist who is legally liable . It steps into the shoes of the missing or inadequate liability coverage of the at-fault driver, so the insured must be legally entitled to recover - the other driver must be at fault.
UM/UIM is first-party coverage that supplements Part A. Because it requires the other party's fault, it is conceptually different from no-fault Part B: Part B pays regardless of fault; Part C pays only when someone else is to blame and cannot pay.
Uninsured vs. Underinsured
Type Trigger
Uninsured motor vehicle (UM) At-fault driver has no liability insurance, an insurer that is insolvent , or is a hit-and-run (phantom) driver who flees
Underinsured motor vehicle (UIM) At-fault driver has liability limits lower than the insured's damages (or lower than the insured's own UIM limit, in many states)
A vehicle is not uninsured if it is owned/operated by a self-insurer, a government unit, or - importantly - if it is the insured's own covered auto (you cannot collect UM from yourself). A hit-and-run generally requires physical contact in many states, though some allow a corroborated phantom-vehicle claim.
Worked Numeric - Underinsured Motorist (Difference Approach)
The at-fault driver carries only $25,000 BI liability. The injured insured carries $100,000 UIM and proves $80,000 in damages. Under the common "difference of limits" approach:
The insured collects the at-fault driver's $25,000 liability limit first.
The insured's UIM then pays the gap up to its limit : $80,000 proven damages - $25,000 already collected = $55,000 from UIM.
Total recovery = $80,000 ($25,000 + $55,000), fully indemnifying the insured.
Note: states vary between "difference of limits" and "excess/reduced" offset methods. Under a reducing approach, the UIM limit ($100,000) is reduced by the $25,000 already paid, leaving up to $75,000 available - here still enough to cover the $55,000 gap. Read the exam's state outline for the local rule.
Who Is an Insured and Stacking
For Part C, an insured is you or any family member , plus any other person occupying your covered auto , and anyone entitled to recover damages because of injury to those persons.
Stacking lets an insured combine UM/UIM limits across multiple vehicles or policies:
Intra-policy stacking - combining limits across vehicles on one policy.
Inter-policy stacking - combining limits across separate policies.
Many states and ISO endorsements prohibit or limit stacking through anti-stacking language, and UM/UIM is a coverage insurers must offer and that insureds often must reject in writing to waive. Limits selection and written rejection are frequent exam points.
Split Limits, Offsets, and the UM/UIM Decision
UM/UIM is written with its own limits , often matching the Part A liability split (for example 100/300 for BI). When multiple insureds are hurt by one uninsured driver, the per-person and per-accident caps apply exactly as they do under Part A. A single severely injured claimant is capped at the per-person amount; total recovery across all claimants cannot exceed the per-accident amount.
UIM trigger tests vary by state and decide whether a claim even opens:
Limits-trigger (difference) states: UIM responds whenever the at-fault driver's liability limit is lower than the insured's UIM limit.
Damages-trigger (excess) states: UIM responds only when the damages exceed the at-fault driver's available liability, and the UIM limit may be reduced (offset) by what the insured already collected.
Because the offset method changes the math, candidates should always identify whether the question is set in a difference state or a reducing state before computing the payout.
Part C Traps
The insured must be legally entitled to recover - if the insured was the at-fault party, Part C does not respond.
UM property damage (UMPD) is not standard in every state; many require collision coverage instead.
Payments under Part C may be reduced by amounts paid under Part A, Part B, or workers compensation to prevent double recovery.
A vehicle owned by the named insured but not insured on the policy is generally not an uninsured motor vehicle (the "owned-but-not-insured" exclusion blocks collecting UM for your own uninsured car).
The other driver being uninsured does not waive the requirement that they be at fault .