Arkansas Auto Insurance Quick Guide

McGhee Insurance Agency presents this Quick Guide to provide a brief description of Arkansas Auto Insurance. For more detailed information, visit our website at www.mcgheeinsurance.com, or give us a call at any of the numbers listed below.
Automobile Insurance Coverage
An automobile insurance policy is made up of several types of coverage options: LIABILITY, COLLISION, COMPREHENSIVE, PERSONAL INJURY PROTECTION, UNINSURED MOTORIST, UNDERINSURED MOTORIST and other options. You are not required by law to purchase all of these options. Your finance company may require certain coverage options.
Arkansas Law requires that all motor vehicles driven in the state must be insured with a minimum amount of liability coverage: $25,000 for bodily injury or death of one person in any one accident; $50,000 for bodily injury or death of two or more persons in any one accident and $25,000 for damage to or destruction of the property of another.
Liability Bodily Injury protects you against a claim made by someone who has been injured in a automobile accident for which you are legally liable. The amount of coverage you have is stated in your policy.
Liability Property Damage protects you against a claim for damage to another person's auto or other property, real or personal, in an accident for which you are legally liable. The amount of coverage you have is stated in your policy.
You may purchase higher limits of liability if you feel the minimums required by law are not enough to protect you. Our agents can assist you in determining the appropriate amount.

Collision coverage pays for damage to your automobile as the result of colliding with another vehicle or object, regardless of who is at fault. Collision coverage has a deductible that you must pay; the insurance company then pays the balance owed to the repair company.
You should always consider the deductible amount you can afford. The larger the deductible, the less premium you will have to pay. Be careful that your deductible is not so large that you cannot afford to pay it if your automobile is damaged.

Comprehensive coverage pays for damage to your automobile caused by collision with an animal or damage caused by something other than a collision with another vehicle. Comprehensive coverage includes fire, theft, vandalism, water, hail, windstorm, and flood.
Comprehensive coverage can be purchased with or without a deductible. The lending institution that finances your automobile will require that you have coverage on your automobile. The lending institution will be named as a loss payee on your policy so that its financial interest in the automobile is protected. You should be aware that in the event of a total loss of your automobile, the actual value of your car may be less than the balance you owe to your lender.
If you should fail to purchase or maintain coverage on your automobile the lending institution will purchase coverage and you will be required to pay the lending institution any premium it had to pay for this coverage. This lender placed coverage is much more expensive than coverage you can purchase and may protect only the interest of the lender.

Personal injury protection is offered in three optional parts. You may purchase any one or all three options. If you decide you don't want any of the options you must reject them in writing.
These options are medical payments, which include payments for doctor bills, X-rays, ambulance and funeral expenses; lost wages (with certain restrictions) and death benefits.
This protects you and members of your household who are injured or killed while riding in your automobile. It also covers passengers in your automobile who are not members of your household if they do not have this coverage under any auto policy of their own. It also covers any pedestrian or cyclist you might strike with your automobile.

This coverage is available in two parts -- uninsured motorist bodily injury and uninsured motorist property damage. You may purchase the bodily injury without purchasing the property damage coverage, but in order to purchase the property damage coverage, you must first purchase the bodily injury coverage.
Uninsured motorist bodily injury covers you and members of your household who are injured by an uninsured motorist. This portion pays medical bills, disability and death benefits resulting from the accident.
motorist. A deductible may apply. Uninsured Motorist Coverage will be included in your policy unless you sign a statement rejecting the coverage.
Underinsured Motorist pays should you be struck by another driver who does not have enough liability coverage to pay for all of your medical bills. This is designed to pay those uncovered medical expenses up to the limit of the amount of coverage you purchase.

Arkansas Automobile Assigned Risk Plan
If you are unable to obtain auto liability insurance through normal means, your McGhee Insurance Agent can apply for coverage for you through the Assigned Risk Plan.

Notes About Purchasing Automobile Insurance
You should be aware that different insurance companies charge different amounts for essentially the same coverage. If an insurance agent represents only one company (like Allstate, State Farm, Farmers, etc) it would be necessary for you to call several companies in order to find the best deal you could.
McGhee Insurance Agency is an independent agency. As such, we represent many different insurance companies, and our agents do the shopping for you. Our goal is to help you get the best possible coverage at the best possible price.
Here are a few ideas that may help you save money when purchasing your automobile insurance.
Consider increasing the amount of your deductible. Decide how much of the initial loss to your automobile you can afford to pay and see what deductibles various companies offer.
Consider having a deductible on your comprehensive coverage rather than no deductible at all. You may even want the same deductible on both Comprehensive and Collision.
Submit proof that any young drivers have completed a driver education course which meets the standards set by the National Conference of Driver Education. You may be entitled to a discount.
If you have a driver over the age of 16 and under the age of 25 who is either a full time student or a graduate of a college or university with a "B" or better grade average or a 3 point average on a 4 point scale, this driver may qualify for a good student discount.
High performance cars, sports cars and exotic cars are usually rated higher by insurance companies. In fact, it may be difficult to find a company that would be willing to insure the automobile.
McGhee Insurance Agents are trained to search for any discounts the company may offer. If you insure more than one automobile, you may qualify for a multi-car discount. Discounts to nondrinkers, nonsmokers, and accident-free drivers may also be available.
Arkansas law requires insurance companies to give a discount on auto premiums to persons over 55 years of age who have completed a motor vehicle accident prevention course approved by the Office of Motor Vehicles.

Filing a Claim
Your insurance policy will explain your duties to the insurance company in case of an accident. You should:
Report all accidents to the police.
Report the loss to the company as soon as reasonably possible.
Use reasonable care to prevent further damage to your car.
Cooperate with the company in settling the claim.
File a proper proof of loss which the company will provide to you.
Forward all documents concerning any lawsuit arising from any accident to your company immediately.

An insurance company may cancel your policy after it has been in effect for over sixty (60) days for only the following reasons:
(1) Nonpayment of premium;
(2) Fraud or Misrepresentation in your application for insurance;
(3) Homicide arising out of use of a motor vehicle;
(4) Three separate convictions of speeding and/or reckless driving within the policy period and three months prior to the beginning of the policy period; or
(5) Conviction of driving while intoxicated.
A company must give you a 20 day written notice of their intent to cancel for the above reasons. However, a company must only give you a 10 day written notice if cancellation is due to nonpayment of premium. Your McGhee Insurance Agent will also receive these notices and will contact you about necessary steps to take to insure you maintain auto insurance coverage.

If your company decides not to renew your policy on the expiration date, it must give you a 30 day written notice of its intent. Your McGhee Insurance Agent will then help you apply for coverage with another company. You cannot be refused coverage based solely on the fact you have been previously non-renewed


Auto Insurance Coverage for Rented, Owned, and Leased Vehicles

Over the past few months the University Treasurer’s Office has received a number of general inquiries about the University’s auto insurance programs for vehicles that are owned by the University/State and for vehicles that are leased by the University. In addition, we have received some very specific questions about what types of auto insurance University employees should be purchasing from rental companies when renting vehicles for University business. The purpose of this memorandum is to provide an overview of the University’s auto insurance programs, as well as to provide guidelines for University employees to consider when renting vehicles for University business. As you review the information contained in this memorandum, it is helpful to remember that in general there are two types of insurance coverage related to vehicles: Liability Insurance and Physical Damage Insurance. Liability Insurance covers bodily injury or property damage to a third party. Physical Damage Insurance (Collision and Comprehensive) covers property damage to the insured’s vehicle.

When a University employee is renting a vehicle for University business, the employee needs to INCLUDE the “University of Massachusetts” next to their own name on the rental application. This will help to ensure that the University’s Hired and Non-owned Excess Liability policy, which is described below, will provide excess liability coverage, if warranted.
When renting a vehicle, there are a number of important decisions that need to be made with regard to insurance. The employee will most likely be given the option of buying the following two types of rental insurance: Liability Insurance and Physical Damage Insurance (Physical Damage Insurance is often referred to as a Collision Damage Waiver (CDW) or a Loss Damage Waiver (LDW) in the rental agreement). The information that follows will help the employee decide when it is necessary to purchase the insurance from the rental company and when it is appropriate to waive the coverage.
Liability Insurance - The University has a Hired and Non-owned Liability Insurance policy for vehicles rented for University business. The University’s policy is only an excess policy. This policy has a $1,000,000 combined single limit for bodily injury and/or property damage to others. It is a good idea for the employee to have a copy of the Certificate of Insurance with him/her when renting a vehicle as it maybe required. A copy of the Certificate of Insurance evidencing this coverage can be obtained from the University Treasurer’s Office.
When renting a car for University business, the employee should:
Decline the Liability Insurance offered by the rental company, if the employee is renting the vehicle in Massachusetts and will only be driving the vehicle in the State of Massachusetts. In Massachusetts, rental companies are required by State
Law to carry the minimum liability coverage on their rental vehicles (the rental company’s liability insurance serves as the primary liability insurance), so purchasing the additional Liability Insurance from the rental company is not necessary due to the University’s existing excess policy.
Purchase the Liability Insurance offered by the rental company, if the employee is renting a vehicle outside of the State of Massachusetts or for use outside of Massachusetts.
Physical Damage - The rental vehicle also needs to be covered by Physical Damage Insurance (Collision and Comprehensive).
When renting a car for University business, the employee should:
Decline the Physical Damage Insurance offered by the rental company, if the employee is using a University issued business credit card to rent the vehicle and that credit card provides primary coverage for physical damage. Please note that it is important for the employee to carefully review the terms of their University credit card to make sure that it does provide primary Physical Damage Insurance when renting a vehicle. The employee will also want to make sure that the type of vehicle he/she is renting is not excluded from the coverage provided by the credit card.
Purchase the Physical Damage Insurance offered by the rental company, if the employee is using a personal credit card, or any other means of payment, that does not provide primary Physical Damage Insurance coverage.
If in doubt as to whether or not the employee’s University issued business credit card provides primary physical damage coverage, it is a good idea to purchase the coverage from the rental company. The Physical Damage Insurance coverage offered by the rental company is a good protection at usually a low daily rate. Please contact the University Treasurer’s Office if you have any questions regarding a rental or credit card contract.

Owned Vehicles
The University is self-insured for auto liability associated with University/State owned vehicles. Our office manages this program and settles all claims. Settlements are generally paid directly by the at-fault campus, unless the settlement/judgment exceeds $2,500, in which case the State Attorney General’s Office needs to approve it, and payment will be made by the State Comptroller. The State Comptroller assesses an annual premium based on the average of all negligence settlements and costs paid on behalf of the University over a five year period. The University relies on certain protections from Massachusetts State Law Chapter 258 when self-insuring. In particular, University employees are generally immune from personal liability associated with damages resulting from their negligence while working within their job responsibilities. The University’s liability is capped at $100,000 per claimant for the actions of its
employees. Therefore, only University employees should be driving University/State owned vehicles.
The University is prohibited from insuring University/State owned property per Massachusetts State Law Chapter 29, Section 30. Therefore, University/State owned vehicles are NOT insured for Physical Damage (Collision and Comprehensive). Any damages that our office is not able to subrogate to a third party would be paid for by the applicable department or campus.

Leased Vehicles
Before a vehicle is leased, the lease agreement must be approved and signed by the University Treasurer’s Office.
The University purchases Liability Insurance and Physical Damage Insurance (Collision and Comprehensive) for all leased vehicles. The title to a leased vehicle remains with the leasing company and, as a result, the University is required by the lessor to purchase insurance on the vehicle. When leasing a new vehicle, University departments should request that the University Treasurer’s Office add the leased vehicle to our existing policy, a yearly premium would be assessed to the department, and coverage would extend to anyone driving the vehicle with permission.
Regardless of the type of vehicle used, our office should be contacted if a University employee is involved in an accident while on University business. However, please note that if an employee uses their own personal vehicle while on University business and he/she is in an accident, their personal insurance is primary and they would be responsible for any deductibles.
Our office will continue to keep you apprised of any new information about, or changes to, the University’s auto insurance programs. Please share this memorandum with the appropriate staff and departments on your campus. In addition, this information is available on our website at http://treasurer.umassp.edu. Finally, if you have any questions, please feel free to contact the University Treasurer’s Office at (508) 856-4700.

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