By Andrew Coker, Coker Insurance
Underinsured Motorist Coverage in Arkansas: What It Means & Why You Need It
Every time we get on the road in Arkansas, there’s a risk—not just from accidents themselves, but from what happens after an accident, especially when the at-fault driver doesn’t carry enough insurance (or none at all). Underinsured motorist coverage (often shortened to UIM) is one tool that helps protect you in those situations. Let’s dive into what it is, what the law says here, and why it might be a smart choice.
What Is Underinsured Motorist Coverage?
Underinsured motorist coverage is an optional auto insurance add-on that helps cover your medical bills, lost wages, or other damages if you’re injured by someone whose liability insurance limits are too low to fully compensate you. Basically, even if the other driver has insurance, if their policy maxes out before covering all your losses, UIM kicks in to help bridge the gap (depending on your own policy limits).
This is distinct from:
- Uninsured Motorist (UM): covering accidents with drivers who have no liability coverage.
- Liability Insurance: required insurance that covers others if you are at fault.
The Legal Landscape in Arkansas
Here’s a summary of how Arkansas handles UIM (and related coverages), with state laws and statistics:
- Required Offer, Right to Reject
Arkansas law requires that any private passenger vehicle liability insurance policy must offer underinsured motorist coverage. You have the right to reject it in writing. That means it’s not mandatory you carry it, but your insurer must give you the chance. - Tied to Uninsured Motorist Coverage
UIM coverage in Arkansas is only available if you’ve elected uninsured motorist coverage. You can’t get UIM without UM coverage. - Minimum Limits
The law requires that the coverage “shall be at least equal to the limits prescribed for bodily injury or death under § 27-19-605.” That means whatever the required minimum for liability is, your UIM must match at least that floor if you accept it. - What It Covers
UIM allows you (or your legal representative) to recover damages when the other driver’s liability insurance is insufficient to cover your injuries or death. The UIM coverage should not be reduced by what that at-fault driver has paid except to avoid overcompensating beyond your actual damages. - State’s Minimum Liability Requirements
To understand what “underinsured” means in practical terms, you must know the minimum liability coverage in Arkansas. Drivers are required to carry at least:
• $25,000 per person for bodily injury,
• $50,000 per accident if more than one person is injured,
• $25,000 for property damage. - Trends & Uninsured Drivers
A few years back, Arkansas had about 16 % of its drivers uninsured. With a new real-time insurance verification system (launched in 2020), that rate has fallen. As of 2023, it is around 8.7%.
Why Underinsured Motorist Coverage Matters
Even with these laws and improvements, UIM is far from just fluff. Here are reasons why it’s especially important in Arkansas:
- Liability Minimums Aren’t Always Enough
Medical bills, lost wages, rehab, pain & suffering etc. often exceed the minimum liability limits. If someone causes serious injuries or permanent damage, the standard liability insurance may not cover everything. Without UIM, you could be left on the hook for those extra costs. - Uninsured / Insufficiently Insured Drivers Are Still a Reality
Despite newer verification systems, there are still a number of drivers without insurance or whose policies are minimal. An accident with such a driver can leave you uncovered if you only rely on their insurance. The fact that Arkansas had ~16 % uninsured in recent years (before dropping) shows how possible this risk is. - Hit-and-Run & Other Gaps
Sometimes you may be hit by someone who flees, or by someone whose insurance kicks in but has limits well below your total loss. UIM helps fill those gaps. Also, sometimes liability insurance doesn’t cover certain damages (or only partially). UIM can be a cushion. - Peace of Mind & Financial Security
Having UIM means that in addition to your own medical coverage, you have insurance protection if the “other guy” can’t pay. It reduces risk of being financially crippled after a serious accident.
Things to Watch Out For / Potential Drawbacks
While UIM is very useful, there are some tradeoffs and nuances to be aware of:
- Cost: You’ll pay more in premium if you include UIM (especially higher limits). It’s an added cost, though many people find it worth the extra dollars.
- Rejection in Writing: Because you are allowed to reject UIM, sometimes people decline it to save money, and later regret it if an accident happens.
- Limits & Stacking: Even with UIM, your own policy’s limits matter. Choosing low UIM limits may still leave you exposed if damages are very high. Also, some policies have clauses (like anti-stacking) which limit how much you can recover if you have multiple vehicles or multiple policies. Always read the fine print.
- Burden of Proof / Documentation: If you make a UIM claim, you’ll need to show that the at-fault driver’s limits are insufficient, that your damages exceed those limits, and provide documentation (medical bills, etc). Delays or disputes can happen.
What You Should Do
Here are practical steps for someone in Arkansas considering UIM coverage:
- Talk with Your Agent
Ask what UIM options are available, what your policy’s limits are, and what adding UIM will cost you. Understand the coverage terms, any exclusions, and how it coordinates with UM and liability coverage. - Assess Your Risk Profile
If you have substantial medical insurance, good health, low deductible, or low exposure, you might decide lower UIM works. But if you have limited savings, or if an injury could be financially devastating, going with higher UIM coverage makes sense. - Choose Adequate Limits
Don’t just take the minimum. Think about potential worst-case scenarios: what if there’s a serious injury, long recovery, or permanent disability? Higher limits give you more cushion. - Always Keep Uninsured Motorist Coverage, Too
Since UIM is only available if you have UM in Arkansas, make sure you’ve got that. Don’t waive UM lightly, because uninsured drivers are still on the road. - Review Regularly
As your circumstances change (health-wise, financially, family, assets), re-evaluate whether your insurance protection is still sufficient. What was “enough” 5 years ago might not be now.
Bottom Line
Underinsured motorist coverage isn’t cheap, but it’s relatively inexpensive relative to the potential cost of being in a serious accident with someone who doesn’t carry sufficient insurance. In Arkansas, the laws require you be given the choice, but it’s up to each driver to make the decision. Given the remaining risk of uninsured or minimally insured drivers, UIM coverage is a smart safeguard.
If you’re in Arkansas, it makes sense to think of UIM not as an extra luxury, but as a safety net—one that can prevent a serious financial hole in your life if things go wrong. Call Coker Insurance today for a quote on your auto insurance.