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Consumer Frequently Asked Questions |
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PRIVATE PASSENGER
AUTOMOBILE INSURANCE Q. What
coverages are mandatory? A. Every automobile owner must have
liability coverage. Liability coverage
pays for any claims when you are at fault in an accident. The minimum liability you are required to carry
by law is $25,000 per person for bodily injury, $50,000 per accident and
$25,000 to cover property damage to other’s property. Almost all insurers offer higher limits.
When you apply for liability coverage, you must be offered an opportunity to
purchase coverage for uninsured motorist bodily and property damage,
underinsured motorist coverage for bodily injury and personal injury
protection coverage. Uninsured motorist coverages cover you
and your automobile if the other driver is at fault and does not have
liability insurance. Underinsured motorist coverage gives
you additional protection if the other driver is at fault and doesn’t have
enough coverage to cover your injuries. Personal Injury Protection provides you
with wage loss, death benefits and medical coverage regardless of fault. Q. What
other coverages are available? A. You may also purchase comprehensive
and collision coverages. Comprehensive
coverage protects against damage to your automobile from acts of nature or
other events not associated with operating the automobile. Collision coverage protects against damage
to your automobile when it is involved in an accident. Q. Are
there any discounts that must be offered? A. Yes, the College Graduate
Discount and Defensive Driver Discount for those insureds 55 and over who
have successfully completed a course approved by the Office of Driver
Services. Check with your agent for
any other discounts your insurer may offer. Q. Why
have my rates gone up when I haven’t had an accident and/or claim? A. Probably because the insurer increased
its overall rates because it has paid out more losses than expected.
You may personally receive a lower or higher rate based upon various factors. Q. Why
haven’t my physical damages premiums decreased as my vehicle ages? A. The price of repairing vehicles does
not go down as a vehicles ages. Q. Will
my policy cover me if I rent an automobile? A. This can vary by company. You should ask your agent if your policy covers
you, those you might injure if at fault, and the rental agency’s automobile. |
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HOMEOWNERS INSURANCE Q. What
coverages are mandatory? A. You are not required to have
homeowners coverage by any Q. What
different types of homeowners coverages are available? A. There are several different types, but
most homeowners carry full coverage for all perils including losses
associated with any sudden and accidental event. In the case your home is totally destroyed,
you may wish to consider having replacement cost coverage so that you can
rebuild your home. The all perils
coverage usually includes coverage for your liability to your guests. Other types of homeowners insurance
cover only fire and weather events.
Some are designed specifically for renters. Q. Can
insurance companies use my credit information to deny me insurance or to
increase the premium I pay? A. An insurance company may use credit AS
PART of the process of determining whether coverage will be provided and what
it costs. A Consumer Brochure on use
of credit in homeowners and personal automobile insurance is now
available. This brochure, “Understanding
How Insurers Use Credit Information,” contains information about Act
1452 of 2003 and its affect on the use of credit information in homeowners
and personal automobile insurance underwriting and rating. Q. What
is a public protection classification? A. A rating determined by the equipment,
manpower, water source and other factors of a fire district. Classifications range from 1 to 10, with 10
being a very rural area with very little fire protection. Q. Who
determines a public protection classification? A. The Insurance
Services Office, or ISO, inspects local fire departments and sets the
classification. Q. How
does it effect my homeowners premium? A. Generally, the lower the protection class
rating the lower the base premium. You can contact your local fire department
and ask them for their “ISO public protection class rating”. Q. What
is the difference in replacement cost (RC) and actual cash value (ACV)? A. ACV allows for depreciation in
determining how much to pay you on your claim while replacement cost does
not. Q. How
do I know what type of policy I have (RC or ACV)? A. You may wish to contact your
agent. You can also read the loss
settlement provision of your policy. Q. Why
have my rates gone up when I haven’t filed any claims? A. Probably because the insurer increased
its overall rates because it has paid out more losses than expected.
You may personally receive a lower or higher rate based upon various factors. |
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INSURANCE PREMIUMS Q. Does the Insurance Department set insurance rates? A. No,
that is a common misconception regarding the Department’s oversight of
rates. Proposed rate changes by
insurers must be filed with the Arkansas Insurance Department at least twenty
(20) days prior to the effective date.
We have broad authority to review how the rate is distributed among
insureds according to factors that might predict future losses, but we cannot disapprove an overall rate
unless it is actuarially “excessive, inadequate or unfairly discriminatory.” “Excessive.” A rate becomes excessive when the loss ratio (losses divided by
premiums paid) drops to a point which results in the insurance company
earning an excessive amount of profit. “Inadequate.” A rate is inadequate if it will lead to solvency problems
immediately or has the potential for long-term solvency implications in that
it may not provide sufficient fund to pay future claims, the costs of
adjusting those claims and operating the business. “Unfairly
Discriminatory.” All insurance discriminates among
various risks. There is “fair,” i.e.,
“legal” discrimination, and “unfair,” i.e., illegal discrimination. Cross-subsidies encourage risky behavior in
some risk categories. Therefore,
allocating the premiums among risks tends to discourage risky behavior. “Unfair” discrimination basically means not
treating similar risks the same in rates and coverages. Q. What rates are reviewed? A. We review private
passenger auto, homeowners, workers’ compensation and professional liability
insurance rates. |
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WORKERS COMPENSATION Q. What
part does the Arkansas Insurance Department play in workers’ compensation
issues and claims? A. The |
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HEALTH
INSURANCE Q. What
is a “pre-existing condition”? A. It is a health condition you had
before you purchased your health insurance coverage, such as cancer, regardless
of whether you received a diagnosis or treatment before the purchase. Health carriers can sometimes refuse to
cover your pre-existing conditions. Q. When
can my health insurance carrier exclude coverage for my pre-existing
conditions? A. There are several circumstances in
which your health carrier can refuse to cover your pre-existing
conditions. Pre-existing conditions
can always be excluded if you buy an individual health insurance policy. For group health policies, pre-existing
conditions can only be excluded under the following circumstances: -
The pre-existing
condition exclusion relates to a mental or physical condition for which
medical advice, care, etc. was recommended or received within the 6 month
period ending on the enrollment date (date of hire); -
The exclusion can’t
last more than 12 months (or 18 months for a late enrollee) after the
enrollment date; and -
The exclusion period
must be reduced by creditable coverage.
Creditable coverage is virtually any kind of coverage the person had
before enrolling in the present coverage, but not workers compensation,
liability insurance, or any of the excepted benefits listed in Ark Code Ann.
§23-86-310. However, if a person has
coverage, followed by break of 63 days, that prior coverage does not count as
creditable coverage! To illustrate,
suppose an individual had coverage for 2 years followed by a break in
coverage of 70 days and then resumed coverage for 8 months. That
individual would only receive credit for 8 months of coverage; no credit would
be given for the 2 years of coverage prior to the break in coverage of 70
days. Q. Can
my pregnancy be excluded as a pre-existing condition? A. In a group health plan, No; under an
individual policy, Yes. If you are
going to buy an individual policy, always buy a maternity rider if you may
become pregnant! Q. I
have been offered a health insurance policy by a company I have never heard
of. The rate is very low, and this
looks too good to be true! Should I
buy it? A. Unauthorized health insurance has been
a big problem in Arkansas in recent years.
Hundreds of Arkansas consumers have purchased insurance from companies
they thought were legitimate, only to be left with thousands of dollars in
unpaid medical claims. Keep in mind that if something looks too good to be
true, it probably is! Always call the
Arkansas Insurance Department if you are unsure about an insurance product
you are offered. We can check to make
sure that both the insurance carrier and producer offering it are properly
licensed. Here are some other danger
signs: -
Beware if a licensed insurance agent attempts to
sell you health coverage that claims to be an ERISA plan. -
Be skeptical if the plan offers coverage without
pre-existing condition exclusions. -
Investigate offers that avoid the word “insurance”
or the use of insurance terminology. -
Watch out for terms like “consultant fees” (instead of commissions) and
those that refer to payments as “contributions.” -
Be skeptical if companies fail to disclose name of carrier for products
they claim to be “fully insured” or “fully funded.” -
Investigate a company if enrollees are required to
join and pay dues to an “association” to obtain health coverage. Health discount cards are regulated by the Arkansas
Attorney General. If you have
questions about health discount cards, please contact the Attorney General’s
office at 1-800-482-8982. Q. What
is Arkansas' Any Willing Provider Law? A. Arkansas' “Any Willing Provider Law”
provides that persons in group or individual health plans or HMOs will be
able to go to the doctors or hospitals of their choice, if the doctor or
hospital agrees to the terms and conditions of that person's health
insurer or HMO. A provider will have
to apply for admittance to a network and go through the network’s
credentialing process; a network cannot take more than 180 days to process a
provider’s application. Follow this
link to Directive 2-2005 for more information: http://www.insurance.arkansas.gov/PandC/PCDirectives.htm Q. How
long does a health insurance company have to pay a health insurance claim? A. Health insurance companies, including
HMOs, have 30 days to pay a claim to either you or your medical provider, if
the claim is electronically filed with the health insurance company. If the
claim is mailed to the health insurance company, the health insurance company
has forty-five days to pay the claim. All of these time deadlines assume that
the claim is considered a "clean claim," or a claim falling
squarely under coverage under the health plan, in which no further
information is needed by the health insurer to process the claim. If the
claim is however not "clean" or the health insurer needs more information
to process the claim, the health insurer is allowed 30 days to collect
the information, and after all of the required information is received by the
health insurer, the 30 (electronic) and 45 (non-electronic) day payment rules
then apply. Q. Is Maternity a
mandated benefit? A. No,
it is not mandated by the Arkansas Insurance Department. Complication of Pregnancy is a covered
benefit. In employer groups of more
than 15 employees, Title VII of the Civil Rights Act of 1964 states that any
health insurance provided must cover expenses for pregnancy-related
conditions on the same basis as expenses for other medical conditions. Q. Is In-Vitro
Fertilization a mandated benefit? A. Yes,
refer to ACA §23-85-137, ACA 23-86-118 and Rule and Regulation 1. It is a benefit on a policy which provides
normal pregnancy-related benefits. It
does not apply to HMO’s or to self-insured plans. Q. In what situation
is a newborn automatically covered under an insurance policy? A. Under
ACA §23-79-129 – If an insured has a policy (individual or group), that
covers the insured and at least one family member (spouse or child), then a
newborn must be covered from birth for at least 90 days. If an insured has an individual policy or
certificate with no dependents, in most situations, the newborn will have to
go through underwriting unless otherwise stated by contract language. Q. Is there a state
continuation law for health insurance? A. Yes,
state continuation is for 120 days as outlined under ACA 23-86-114. Q. Can
a medical provider file a complaint with the Department for slow payment
issues against a health insurer or HMO? A. Yes. The Department, however, requires
that the medical provider provide evidence in the complaint showing a
"pattern of slow payment" practices by the health insurer or HMO. Q. Are
there statutes or Rules concerning the use of age and gender as underwriting
criteria in Arkansas? A. Yes. An insurer should consider the relevant
provisions of the Arkansas Trade Practices Act, Ark. Code Ann. §
23-66-206. However, if age and gender
are proven to be a substantial factor as an underwriting criteria by the
alleged discriminator, then an insurer is not prohibited from using it as a
criterion to charge different rates to different customers. |
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External
Review Q. What is external review? A. An independent
review of claims for benefits (treatment or services) to see if they are medically
necessary or experimental/investigational. The requested benefit must be at
least $500 for external review to apply. Q. What if I need the
requested treatment as soon as possible?
A. You
may qualify for expedited external review, where a decision is rendered as
soon as necessary, but no later than 72 hours after the IRO receives the
request for external review. Q. What type of plans
does external review apply to? A. All
health insurance plans, except specified disease, limited supplement benefit,
long-term care insurance, self-insured plans, CHIP pool, Medicare, WC, or
automobile med pay. (For more
specifics, see Section 1 E) Q. What if I, or my health insurance carrier,
don’t like the IRO’s decision? A. Then
you can file a lawsuit. Both the
health carrier and the covered person have the right to go to court. Q. Who
can request external review? A. The person covered under the health
insurance policy and/or that person’s authorized representative. An “authorized representative” is: -
A
person to whom a covered person has given express written consent to
represent the covered person in an external review; -
A
person authorized by law to provide substituted consent for a covered person;
or -
When
the covered person is unable to provide consent, a family member of the
covered person or the covered person’s treating health care professional if a
family member is unavailable. Q. Who
performs external reviews? A. An independent
review organization (“IRO”) certified by the Department. It is independent of both the insurance
company and the covered person. Q. When can I request an external review? A. After your claim
for treatment or services, which have to be at least $500, has been denied as
being not medically necessary or as being experimental/ investigational. Generally, you have to exhaust your heath
carrier’s internal appeal process before requesting external review. Q. When do I have to
request an external review? A. You have sixty
days after you receive an initial denial or a final denial (after the
carrier’s internal appeals process is completed). Q. Where
can I find out about external review? A. Your health
insurance carrier should provide this information in your policy. Also, your health carrier is required to
give you information about your right to an external review after it
initially denies payment for your claim as not being medically necessary or
as being experimental/investigational.
Most carriers have an internal appeals procedure, and if your claim is
still denied after the internal appeals process, your carrier must again tell
you about your right to external review. Q. Where can I find
out more about external review? A. You
can call your health carrier or the Arkansas Insurance Department. Q. How do I request
an external review? A. Your health
carrier will give you this information in your policy and after your claim is
denied. Q. How much does it
cost to have an external review? A. The covered person
pays a $25 filing fee, but this is refunded if the carrier’s decision is
overturned. The fee does not apply to
a request of an expedited review, and it can be waived by the Commissioner if
the covered person would suffer undue financial hardship. The health carrier pays for the cost of the
external review. Q. How long does it
take the IRO to complete an external review? A. Within 45
calendar days of the IRO’s receipt of the request
for the external review. For an
expedited review, the review is completed as soon as necessary, but no later
than 72 hours after the IRO receives the request for expedited review. Q. Why does external review only apply to claims that are
denied as not being medically necessary or as being
experimental/investigational? A. Because other
terms in your insurance policy are agreed upon by you or your employer when
you sign up for the coverage. Doctors
can differ, though, on what is experimental/investigational or medically
necessary. |
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miscellaneous Q. Are
Professional Employer Organization services (PEO) licensed in Arkansas? A. Yes. By using our Company
Search database you can find out if someone offering PEO services holds a
valid license to sell those services.
You can also get a complete listing of every licensed PEO doing
business in Arkansas. Q. What
is the difference between a PEO and an Employee Leasing Firm? A. None.
In 2003, the name of the license was changed from an Employee Leasing
license to a Professional Employer Organization license. The definition of what constituted these
business was not changed. Q. Is
there insurance available for damage caused by earthquakes? A. Yes.
A Market Assistance Program (MAP) has been developed as a result of
the Arkansas Earthquake Authority Act of 1999. The MAP is designed to assist
consumers who are unable to find residential earthquake insurance through
traditional sources. Additional information is available by calling
1-800-852-5494. On homeowners coverages, your company
must tell you if it does not offer earthquake coverage and provide you with
information on how to obtain coverage through the MAP. Q. High-risk
insurance pools, what are they and how do I find them? A. High risk pools are designed to
provide coverage for consumers who are unable to secure insurance in the
voluntary market. The Property and Casualty Division of the Arkansas
Insurance Department manages the residual or assigned risk plans for workers'
compensation and automobile insurance. Additionally, fire insurance is
available through a Rural Risk Underwriting Association, which provides
coverage for structures located in rural areas--where coverage is not available
in the voluntary market. Contact your
insurance agent for specifics. Here is a listing of the
administrators of the various pools: National Council on Compensation
Insurance (NCCI) Little Rock, AR-501-834-9123 or
1-800-622-4271 Arkansas Rural Risk Underwriting
Association (ARRUA) 1-800-272-6588 (Arkansas only) 1-800-233-2398 (out of state) Arkansas Automobile Insurance Plan (Agents only...Consumers must access
this plan through their insurance agent.) 1-800-413-5808 Earthquake Market Assistance Program 1-800-852-5494 Q. What
is “Surplus Lines” and when can I buy insurance from a surplus lines company? A. When licensed insurers are unwilling
or unable to provide needed coverage, you may secure coverage with an
approved surplus line insurer through a licensed surplus line broker.
Individuals or corporations may secure insurance coverage directly from a
non-admitted insurer. This coverage is considered
"self-procured." Your agent
can help you if surplus lines coverage is required. Surplus lines insurance is regulated by
Rule
24. Q. Does
the Arkansas Insurance Department license or regulate premium finance
companies?
A. We do not. Federal and State Bank regulators do
that, along with U.S. Attorney and the Arkansas Attorney
General. Contact the Arkansas Attorney General on-line via links
from the State website at www.ag.arkansas.gov. Q. May
producers charge insureds fees over and above gross premiums charged by
carriers on the policies delivered to the insureds? A. In general, Ark. Code
Ann. § 23-66-310 allows a producer to charge a fee in excess of the premiums
as long as: a. The fee is separately
disclosed on the insured’s bill; and b. The fee does not exceed
20% of the premium. Q. May
I buy an insurance policy on other people or property? A. It
depends. If you are related to a person in ways approved under the
law, you may. You may if you have title to real property or
personal property, such as a car or boat. If your company
considers you to be a key officer or director or manager, it may
take out a life policy on your life to benefit the business. Anyone seeking to buy
insurance on other people or property must have an "insurable
interest" at the time the insurance contract is made and sometimes when
the loss occurs, too. The law is found at Ark. Code Ann. §§
23-79-103 (for insurance interests in people) and 23-79-104 (for insurance
interests in property). Q. What
is the "Valued Policy" law on total fire losses of buildings
and real property?
A. The valued policy law,
Ark. Code Ann. §23-88-101, covers losses on real property, such as
a house, from fire and natural disasters. Basically the valued policy
law says that, absent an insurer defense such as arson or other insurance
fraud, the insurer for a total loss on real property owes the full face
amount (total policy price in $ dollars) of the policy without depreciation
or contesting the value. Insurance companies in rural areas
must pay rural volunteer fire fighter claims out of the insurance
proceeds first before paying the homeowner if the homeowner has not paid its
rural district fire association dues timely, under Ark. Code Ann. §
23-88-102. The valued policy law does not apply to: -
flood or earthquake losses; or -
detached or appurtenant structures. Contact your insurance
producer or your carrier about a rider or endorsement to cover these other
structures. Q. How
can I tell if my insurance binder is any good? A. Insurance binders
are temporary policies of insurance that are generally issued by
insurance producers, though sometimes they come direct from the insurance
company. But not every agent or producer even has authority from the
insurance company to issue a binder or short-term policy. Ask the agent
or producer for something to show that he/she does have full authority, and
that the insurer will honor the terms of the binder. The binder must be replaced by a full
policy in 90 days or less and the policy must match (or not conflict with)
the full policy when the consumer receives it. Q. I
have a prepaid funeral contract with a funeral home. I now want to switch
funeral homes and want to transfer the money I paid the first funeral home to
the new one. Can I cancel with the first funeral home and transfer the money
to the new one? A. Yes, as long as the prepaid funeral
contract was entered into by you before July of 1995. You need to notify the
first funeral home you want to transfer your prepaid funds over to a
substitute funeral provider (the new funeral home). The law requires the
first funeral home to transfer all of the proceeds to the new funeral home,
what you paid down to fund the contract, minus the built up interest. Q. Do
the State or Federal Do Not Call laws apply to the business of insurance and
insurance agents? A. Yes. The Department is able to provide you some
general information, but please remember that the enforcement authority for
the Do Not Call law (both State and Federal) lies with the Arkansas Attorney
General's Office. Below is the link to their website for further information;
you will need to contact the Consumer Protection Division of the Public
Protection Department: Unlike the Federal Trade Commission's
Do-Not-Call rule, the Federal Communication Commission's (FCC) Do-Not-Call Rule
applies to the insurance industry. Insurance agents who use the telephone or
send faxes will have to follow the FCC's Rule and check the national
do-not-call list even in states that have exempted insurance agents from
their do-not-call rules (like Arkansas!). If an agent has an
"established business relationship" with a client and that client
has placed his or her name on the do-not-call list, the agent is still
allowed to call his or her client at home. An established
business relationship exists where the client has made a purchase or entered
into another transaction within the 18 month period prior to the call or when
an inquiry or application has been made within 3 months before the
call. Nonetheless, "cold" calls to numbers on the Do-Not-Call
list are prohibited unless express written permission has been
given to call. Compliance with the FCC Do-Not-Call
Telemarketing Rule has been required since 10/1/2003. There is also a
Do-Not-Fax Rule effective 1/1/2005. Also, the National Association of
Insurance and Financial Advisors has made a joint filing with the American
Council of Life Insurers (ACLI) in 11/2003 asking the FCC to clarify the
definition of "established business relationship" under the
do-not-call rules. The Department encourages you to
contact the FCC directly and inquire about the applicability of the federal
Law to intra-state phone calls, i.e., phone calls made in-state
only from an AR producer to an AR consumer. It is the Department’s
understanding that there is existing confusion as to the applicability of the
former state-exception for insurance under the new Do Not Call
provisions. The FCC's website and
contact information is: http://www.fcc.gov/contacts.html Q. Are proceeds on life insurance protected from
creditors? A. Yes, life proceeds are exempt as stated in Ark. Code Ann.
23-79-131. Q. Are annuity proceeds protected from
creditors? A. Yes, annuity proceeds
are exempt as stated in Ark. Code Ann 23-79-134. Q. If
a company selling long-term care insurance goes into liquidation what would
be covered under the Guaranty Fund? A. The amount of coverage would be
$300,000, or policy limits, whichever is less. The policies not in claim
status would be sold to a solvent insurance company. The policyholder
would receive notice of this, a certificate from the assuming company and
information as to where to send premium payments, make inquiries, file
claims, etc. If the policy is in claim status, the guaranty fund
would pay on the policy until the limit of coverage was reached. Q. I
have a policy issued by Union Life Insurance Company. Can you tell me who has control of this
policy and who can I contact to discuss the policy? |
