Understanding Arkansas Car Insurance

Do you have the right types of insurance for you car or truck? For example, suppose:

Another driver injures you in a wreck
He has only $25,000 in insurance
Your damages (medical bills, wage loss, pain and suffering, etc.) are $75,000

Would you be fully covered? This may depend on your own insurance policy.

Many people do not understand all the car insurance options available in Arkansas. Some purchase all options. Others buy only the insurance required by law. There are often six or more options to choose from. Making an informed decision can be difficult. Some options in buying insurance are discussed below.

I. LIABILITY

The only insurance which you must purchase is liability insurance. It protects others when you injure them. Many people purchase the "minimum limits". Minimum limits will pay up to $25,000 to each person you injure. However, if more than one person is injured, the most it will pay is $50,000 per accident.

You should seriously consider buying more than minimum limits in order to a) protect your own property if you are sued, and b)to more fully care for someone you might seriously injure.

II. NO-FAULT

No-fault insurance pays medical and money benefits to you if you are hurt in a wreck. It is sometimes known as "med-pay", or "PIP"(personal injury protection). It pays these benefits even if you cause the wreck. It will also cover your passengers, and household family members injured in other vehicles (if they do not have such insurance on their own policy).

No-fault benefits are usually paid quickly. For each person injured it pays a) up to $5,000 in medical benefits, and b) 70% of lost wages for a year, up to a maximum of $140/week. You can pay a higher premium and obtain additional benefits (e.g. $10,000 in medical benefits).

III. UNINSURED MOTORIST

Uninsured motorists insurance pays you when another driver injures you. It also covers your passengers and other insured household family members. The other driver must be at fault, and have no insurance. In some cases a "hit and run" driver will be considered uninsured.

You can buy uninsured motorist insurance in "minimum limits" or higher amounts. To get the money you make a claim against your own insurance company (even though the other driver caused the wreck). There are many drivers who violate the law by not having insurance. To protect yourself and your loved ones, we recommend that you buy this insurance.

IV. UNDERINSURED MOTORIST

Underinsured motorist insurance pays you money when the other driver has insurance, but not enough to cover your injuries.

Consider the example at the beginning of this article. If you had $50,000 in underinsured coverage with your own insurance company, you would be entitled to recover an additional $50,000 from it (in addition to the $25,000 that you recover from the other driver's insurance company). This insurance is similar to uninsured motorist insurance in many respects (other driver must be at fault, also covers passengers, etc.).

Underinsured motorist insurance can pay for your losses at a time when it is badly needed (e.g. serious injury to yourself or a family member). We strongly recommend that you carry both underinsured and uninsured motorist coverage.

V. COLLISION AND COMPREHENSIVE

Collision insurance covers damages to your car when it is in a wreck. Comprehensive insurance covers damages from theft, vandalism, etc. Collision insurance covers you even if you are at fault. Generally you are paid quickly, regardless of who causes the wreck. In most cases there are deductibles (e.g. you pay the first $250 to the body shop, and the insurance pays the rest).

You should have these coverages on a newer vehicle. For a vehicle eight or more years old, they may not be cost effective. This is because the insurance company usually will only pay you "book" value if your car is totaled. For example, your older car may be in very good condition and worth $1,500 to you. However, the insurance company may only want to pay you its $500 book value.

VI. CONCLUSION

The types of insurance described above are all optional (except for liability). Your insurance company should offer them to you when you buy insurance. If they do not, ask about these coverages. If you already have insurance, you can add any or all of them to your policy.

If another driver injures you in an accident, our office can assist you. We will make a claim against the other driver and his insurance company. If you have the right insurance and also need it to be fully compensated for your injuries, we can make a claim against your insurance company as well.