While many Arkansas drivers purchase the “state required” auto insurance limits, they don’t realize that in the long run it may actually cost them more money. Did you know that a significant share of Arkansas drivers don’t carry any insurance at all?
What Is State Minimum Auto Insurance in Arkansas?
Arkansas’s state minimum auto insurance limit is currently 25/50/25 — that’s $25,000 in bodily injury coverage per person, $50,000 per accident, and $25,000 in property damage. Bodily injury liability helps pay for the other party’s medical expenses and lost income if you’re at fault in an accident. It may also help pay your legal fees if you’re taken to court. What most consumers don’t realize is that this coverage applies to the other party’s injuries — not your own.
The Downsides to State Minimums
Carrying state minimum limits can leave you seriously exposed, but many drivers assume that’s all they can afford. What they don’t realize is that stepping up coverage often costs only a few dollars more per month. What’s even scarier: whatever damage you cause above your limits, you may be personally liable to pay out of pocket. If you hit a $45,000 truck, for example, you could be held personally responsible for the remaining $20,000. Most new vehicles today are worth well over $25,000. So saving a couple dollars a month on minimum limits could cost you thousands down the road.
Your Own Protection Is Limited Too
Here’s what a lot of drivers miss: carrying state minimums doesn’t just limit what you can pay out if you’re at fault — it also caps what you can collect if you’re hit by an uninsured or underinsured driver. Uninsured motorist (UM) and underinsured motorist (UIM) coverage typically match your liability limits. So if you’re carrying 25/50, that’s also the most you’re protected for if someone with no insurance — or not enough insurance — injures you or a family member. Given how many drivers on the road carry little or no coverage, that 25/50 ceiling can leave you covering your own medical bills out of pocket, even when the accident wasn’t your fault.
Auto Insurance Pricing Isn’t Linear
One of the biggest misconceptions is that doubling your coverage doubles your premium. It doesn’t work that way. Moving from 25/50 to 50/100 doesn’t cost twice as much, and moving up to 100/300 doesn’t cost three or four times more. In most cases, stepping up to the next coverage level costs less than a couple of dollars a month. The base cost of a policy covers a lot of fixed underwriting expense — the marginal cost of raising your limits is small. For a more detailed look at how to shop smart instead of just shopping cheap, <a href=”https://www.millenniumbrokers.com/being-smart-when-buying-auto-insurance/”>see our guide on being smart when buying auto insurance</a>.
State Minimums Can Actually Increase Your Home Insurance Price
Some major carriers actually factor your auto insurance bodily injury limits into your home insurance pricing. The lower your auto limits, the higher your home insurance premium may be.
If you’re not sure what limits you’re currently carrying — or whether state minimum coverage is putting you at risk — a quick review with a local Arkansas agent can show you exactly where you stand and what it would cost to step up your protection.