If you run a business in Arkansas, you must know the state’s insurance rules. Understanding Arkansas’s workers’ compensation and commercial auto requirements helps you stay legal and protect your business from costly claims.
Who Needs Coverage in Arkansas?
The key rule for most businesses is the “three-employee rule”: if you have three or more employees, you must carry workers’ compensation insurance.
Industry-Specific Requirements:
- Construction: Must have workers’ compensation coverage with two or more employees if your business involves building or building repair.
- Subcontractors: A contractor who subcontracts any part of a contract must have workers’ compensation coverage, regardless of their own employee count. A subcontractor must have coverage if they employ one or more people.
- Transportation: Must meet federal Department of Transportation (DOT) insurance rules.
Some jobs are exempt, like domestic workers, farm laborers, and real estate agents paid only by commission. However, because these rules can change, it is best to verify your status regularly.
Other Essential Coverages: While not always required for a state license, other policies are critical. Commercial auto insurance is mandatory if you use vehicles for work. General liability insurance is a standard requirement for most client contracts, and professional liability protects you from service-related lawsuits.
What Arkansas Small Business Insurance Covers
An Arkansas small business insurance plan protects against the risks your company faces—whether it’s an injury, a lawsuit, or a damaged work truck.
Key Coverage Types:
- Workers’ Compensation: Pays for medical care, wage loss benefits, and vocational rehabilitation for injured workers. It also provides death benefits to dependents.
- General Liability: Covers third-party injury claims (like a customer slipping), property damage you cause, and related legal defense costs.
- Professional Liability: Crucial for businesses that give advice or offer services. It defends against claims of mistakes, negligence, or failure to deliver services.
- Commercial Auto: Required for any vehicle used for business. In Arkansas, you must carry minimum liability limits of $25,000 per person / $50,000 per accident for bodily injury and $25,000 for property damage.
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Common Risks and Real Examples
Arkansas businesses face risks from both their operations and the natural environment.
- By Industry: Manufacturing sees equipment accidents; construction has falls and tool injuries; farming faces equipment and livestock incidents; and retail stores contend with slip-and-fall claims.
- Weather Risks: Arkansas experiences tornadoes, severe storms, and flooding. Businesses near the Mississippi River or other floodplains need to secure specific flood coverage, as it is not included in standard property policies.
How Insurance Costs Are Determined in Arkansas
Arkansas business insurance costs are generally competitive. Your final premium depends on several key factors:
- Type of Business: High-risk work like roofing costs more to insure than office-based work.
- Number of Employees & Payroll: Hitting the employee threshold for workers’ comp will add to your premium, which is based on your total payroll.
- Claims History: A safe track record with few claims results in lower rates.
- Coverage Limits: Higher limits provide more protection but increase the premium.
- Location: Urban areas like Little Rock may have slightly higher rates due to increased risk factors.
The Workers' Compensation Claims Process in Arkansas
Knowing the claims process helps you respond quickly and stay compliant.
Steps to Follow:
- The injured employee must report the injury to the employer as soon as possible.
- You must file the required claim forms with your insurance carrier within 10 days of learning about the injury.
- Initial medical treatment is directed by you or your insurance company.
- You must maintain clear records of the injury, treatment, and recovery process.
Timeline and Benefits: Wage replacement benefits begin after a seven-day waiting period. If the disability lasts more than fourteen days, the employee receives retroactive payment for that initial waiting period.
If a dispute arises, the Arkansas Workers’ Compensation Commission (AWCC) provides mediation and formal hearings.
What Happens if You Don't Comply?
Failing to provide required workers’ compensation insurance can result in:
- Fines of up to $1,000 per day of non-compliance
- Class D felony charges
- Court orders to halt all employment until coverage is secured
- Personal liability for all costs related to an employee’s injury
Final Tips and Expert Advice
Whether you run a retail shop in Little Rock or a farm outside Jonesboro, the right Arkansas small business insurance is critical.
Key Takeaways:
- Know when you hit the employee threshold for workers’ compensation.
- Understand the specific rules for construction and subcontractors.
- Carry general liability insurance if you work with clients or third parties.
- Maintain commercial auto insurance with at least 25/50/25 limits.
- Follow the state’s workers’ compensation claims process precisely.
Need more information? Call our Arkansas insurance team at 855-718-7560.
Don’t risk penalties or financial stress. Protect your business the right way—starting today.
