Total loss laws in Arkansas

When is a car totaled in Arkansas?

Short answer: Arkansas uses 70% of the car's value as a salvage-title test (Ark. DFA Office of Motor Vehicle Rule 2007-8 § 2(N)). It does not stop the insurer from totaling a car below that.

For title branding, a 'salvage vehicle' is one that is water-damaged or has other damage equal to or exceeding 70% of its average retail value in a pricing guide approved by the Commissioner. This is a titling threshold; it does not control an insurer's first-party total-loss decision.

Source: Ark. DFA Office of Motor Vehicle Rule 2007-8 § 2(N) (006.05.07 Ark. Code R. § 007), implementing Ark. Code Ann. § 27-14-2301 et seq.

Many online tables mix up title-branding rules with the insurer's own decision. Compare the total loss threshold in every state.

Does insurance pay sales tax on a total loss in Arkansas?

Short answer: Yes. Arkansas requires a cash settlement for a total loss on your own policy to include sales tax and transfer fees such as title and registration (Ark. Code Ann. § 23-89-211(a)-(d)). The same rule covers a claim against the at-fault driver's insurer.

By statute, when an insurer pays a total-loss automobile claim, whether to its insured or to a claimant against its insured, it must include all applicable taxes, including sales taxes and fees as required by Rule 43, plus an itemized list separating the vehicle's value from the sales tax on a vehicle of that value. For claims against its insured it must also take into consideration all applicable taxes, license fees and other fees. The insurer may not abandon salvage to a tow or storage yard in place of paying those fees without consent. Non-compliance is an unfair claims settlement practice under § 23-66-206(13). Rule 43 § 10(a)(2) requires a first-party cash settlement to include all applicable taxes, license fees and other fees 'actually incurred' incident to transfer of ownership of a comparable automobile. Betts v. USAA (Ark. App. 2020) held the taxes and fees are part of 'actual cash value' rather than a separate damages item, and that the insurer properly paid them to the lienholder, whose lien exceeded the payment and whose contract required insurance proceeds to go to it.

Source: Ark. Code Ann. § 23-89-211(a)-(d); Ark. Ins. Dept. Rule 43 § 10(a)(1)-(2) (054.00.15 Ark. Code R. § 005); Betts v. USAA Gen. Indem. Co., 2020 Ark. App. 426, 606 S.W.3d 616

Tax on a replacement car in Arkansas

6.5% state rate. For used vehicles (Act 1013, from Jan 1, 2022): no state tax under $4,000; 3.5% from $4,000 to $9,999.99; 6.5% at $10,000 or more. Local taxes apply in full and are not reduced.

Source: https://www.dfa.arkansas.gov/office/motor-vehicle/recent-changes-in-the-law/

See the sales tax and fee rule in every state.

How must the insurer value your car in Arkansas?

First-party total loss: the insurer either offers a specific comparable replacement vehicle with taxes and fees paid, or makes a cash settlement based on the actual cost of a comparable automobile. That cost is the cost of a comparable vehicle in the local market area, or, if none is available, one of two or more quotations from qualified dealers or appraisal services in the local market area. Any other basis must be documented with particulars of the vehicle's condition. Deductions, including salvage, must be measurable, discernible, itemized, specified in dollars and appropriate, and the basis must be fully explained. Betterment or depreciation deductions must be itemized. Insurers cannot require unreasonable travel or a specific repair shop as a condition of recovery.

Source: Ark. Ins. Dept. Rule 43 § 10(a)-(c), (g)

To check the numbers in your own report, read the CCC valuation report, line by line and how projected sold and typical negotiation deductions work.

How long does the insurer have to pay a total loss in Arkansas?

Short answer: Under Arkansas rules, payment is due within 10 working days after the claim is ready for payment. A decision is due within 15 working days after proof of loss.

Acknowledge a claim within 15 working days. Furnish proof-of-loss forms within 20 calendar days after a loss is reported, or the proof requirement is waived (Ark. Code Ann. § 23-79-126). Reply to pertinent communications within 15 working days. Complete the investigation within 45 calendar days, or notify the claimant with reasons. Advise acceptance or denial within 15 working days after proofs of loss; if more time is needed, notify in writing and then every 45 calendar days. Mail claim checks within 10 working days after the claim is processed and ready for payment. Before a time limit expires, an unrepresented claimant must get written notice at least 30 working days ahead (first party) or 60 calendar days ahead (third party).

Source: Ark. Ins. Dept. Rule 43 §§ 7(a),(c); 8; 9(a),(d),(f)

Compare claim deadlines in every state.

Can you negotiate a total loss offer in Arkansas?

Short answer: Yes. You can reject the offer in writing, ask for the full valuation report and the reason for each deduction, and send your own evidence. The Arkansas Insurance Department, Consumer Services Division takes complaints about claim handling.

The owner can reject the offer in writing and demand the itemized valuation, including the separate sales-tax line required by § 23-89-211(a)(2), plus the comparables or dealer quotes. The owner can also invoke the policy's appraisal clause, file a complaint with the Arkansas Insurance Department, or sue (small claims or circuit court).

1. Ask the adjuster in writing for the complete valuation report and the list of comparable vehicles.
2. Check it line by line: negotiation deductions, condition ratings, comparables, tax and fees. How to read the report.
3. Send a written rebuttal with your evidence and a specific number. How to dispute a total loss valuation.
4. If you still disagree on a claim under your own policy, consider the appraisal clause.
5. If the insurer does not follow the rules above, file a complaint with the state.

How long do you have to sue over a totaled car in Arkansas?

Short answer: Generally 3 years to sue for damage to your car (Ark. Code Ann. § 16-56-105(6)). Your policy may set a shorter limit for suing your own insurer.

Property damage claims in Arkansas generally must be filed within 3 years. Your policy may set a shorter deadline for suing your own insurer; check its "legal action against us" clause.

Source: Ark. Code Ann. § 16-56-105(6) (all actions for taking or injuring any goods or chattels: 3 years)

How to file an insurance complaint in Arkansas

Short answer: File a free complaint with the Arkansas Insurance Department, Consumer Services Division online. It asks the insurer for a written response, but it cannot set the amount you are owed.