Commercial Auto Insurance Minimum Requirements in Arkansas
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Just as private citizens must prove their financial responsibility before driving their personal vehicles on Arkansas roads, so must business owners, and some sole proprietors, properly insure their business vehicles.
In addition to being a legal requirement, commercial insurance also offers basic protection for business assets after a work vehicle is involved in an accident that causes serious injury or significant property damage.
Ways to Establish Financial Responsibility
You must be able to show proof of liability insurance before you can title and register any vehicle in the state. If you own a vehicle involved in an accident causing property damage, injury, or death, you must submit a Safety Responsibility SR-1 accident report within 30 days and show financial responsibility by doing one of the following:
- Provide an SR-21 proof of liability insurance form completed by your insurance company.
- Submit a deposit of security.
- Provide a notarized covenant not to sue signed by the other party.
- Get all parties to agree to payment of damages in installments.
- Submit a copy of a bankruptcy petition with a list of creditors naming all parties.
- Submit a written request for a hearing to determine if there is a possibility a judgment may be rendered against you as a result of the accident.
- Obtain a written release of liability signed by the other party in the accident.
- Offer a written statement that you have been reimbursed for your property damage by the adverse party or his/her insurance carrier.
Commercial insurance is not necessary for every business. If you are a sole proprietor who only uses your personal vehicle to make occasional business trips, you most likely do not need a commercial auto insurance policy. However, if you own multiple trucks with special equipment that are regularly driven by several different employees, commercial insurance becomes a key factor in the success of your business.
Here is some information you may wish to use when deciding if commercial insurance is needed for your Arkansas business:
- How many vehicles require proof of coverage.
- If any of the vehicles have business equipment attached.
- The primary purpose of the vehicles.
- The registered owner of the vehicles.
- How many people drive the vehicles and their relationship to your business.
- If the limits on your personal auto policy would be enough to protect your company assets in the event of a lawsuit.
If you need more help determining whether you need commercial coverage, contact the Office of Motor Vehicles (OMV).
Minimum liability insurance in the state of Arkansas are as follows:
- $50,000 per accident
- $25,000 to cover property damage
- $25,000 per person for bodily injury
Of course, there are many good reasons to consider purchasing more than the minimum amount of coverage. In fact, it's not uncommon for experts to recommend $500,000 to $1 million in liability coverage for business owners with significant assets.
You can also add separate endorsements to a policy to provide protection for medical payments, rental reimbursement, towing and labor, and auto loan or lease gap coverage. And, there is the option of a business umbrella policy to provide coverage for property damage or bodily injury costs after your liability limits have been exceeded.
Contact the OMV if you need more assistance figuring out how much commercial coverage to purchase.
Smart business owners always shop around when making major purchases, so it should come as no surprise that experts recommend you get at least three quotes before purchasing a commercial auto policy.
Prices can vary substantially among carriers, especially if you consider working with one of the insurance companies that specialize in providing insurance to those who need to cover multiple commercial vehicles.
Insurance carriers should automatically notify the Arkansas OMV of your coverage as part of the state's Insurance Verification and Notification Network Program. All companies doing business in Arkansas must file electronic reports at least once per month, although some companies choose to report changes in policies on a weekly basis.
As you might expect, reporting errors do sometimes occur with this system. If you receive a notice from the OMV that your registration has been canceled for lack of insurance, you'll need to contact your carrier to fix the mistake.
For commercial policies, keep in mind that the name of the company the insurance carrier is reporting must exactly match the vehicle registration for the company’s vehicles to show insurance coverage. Commercial policies are reported as one policy per company name, but the OMV makes no assumptions about coverage for companies that have similar sounding names.
When you purchase a commercial auto insurance policy, you'll receive a card for each vehicle. Keep this card in the vehicle's glove compartment so your or your driver(s) can present it to a law enforcement officer upon request.
The OMV is automatically notified within 30 days of a lapse in insurance coverage. If you have no proof of insurance, your vehicle registrations will be suspended and you will need to provide proof of financial responsibility before they can be reinstated.
However, the more significant risk for business owners who fail to maintain the proper insurance coverage is the chance a lawsuit from a single motor vehicle accident could result in a settlement large enough to push an otherwise successful company into bankruptcy.
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