Totaled Car Insurance Settlements in Arkansas: What the Payment Must Include and How to Check the Offer
A total loss offer arrives as one figure, and the conversation that follows is usually about whether that figure is right. There is an earlier question that is easier to answer: whether the payment contains everything Arkansas requires it to contain. Start there, then look at the valuation.
What does Arkansas law require in a total loss payment?
Ark. Code § 23-89-211 sets three requirements, and failing to meet them is treated as an unfair claims settlement practice under Arkansas’s unfair trade practices law (§ 23-66-206). They are objective, so they are the first thing to check.
Taxes and fees
When an insurer settles a claim for damage to a car as a total loss, it must include with the payment all applicable taxes, including sales taxes, and fees as provided in the Insurance Department’s rules.
An itemized breakdown
The insurer must give you an itemized list showing how much of the payment is for the vehicle’s value and how much is for the sales tax on a vehicle of that value. If your letter shows one lump sum, ask for the itemized list.
Towing and storage cannot be dumped on you
An insurer may not abandon the salvage to a towing or storage yard instead of paying the towing and storage fees, unless both the facility and you consent. Storage charges add up daily, so raise this in the first days of the claim.
When the other driver’s insurer pays
When an insurer settles a total loss claim against its own insured, such as a claim you make against the at-fault driver’s policy, the statute says it must take into consideration applicable taxes, license fees and other fees.
These are requirements, not courtesies
Because the statute treats a failure to comply as an unfair claims settlement practice, a request for the itemized breakdown is simply a request that the law be followed. If an insurer does not comply, the Arkansas Insurance Department accepts consumer complaints. File one alongside pursuing the claim, not instead of it.
How does an Arkansas insurer figure the value of a totaled car?
Arkansas Insurance Department Rule 43, section 10, sets the methods for a first-party total loss on a private passenger auto policy. When your policy settles on actual cash value, the insurer must use one of these methods, and any departure must be documented and fully explained to you.
Option one: a replacement vehicle
The insurer can offer you a specific comparable vehicle that is available to you. If it does, it pays all applicable taxes, license fees and transfer fees, so your only cost is the deductible. The offer and any rejection must be documented in the claim file.
Option two: a cash settlement
The insurer can pay what it would actually cost to buy a comparable vehicle, minus your deductible, including taxes and fees. That cost comes from comparable vehicles in your local market, or, if none are available, from quotes from two or more qualified dealers or appraisal services in the local market.
Deductions must be itemized
If the settlement departs from those methods, the insurer must document the vehicle’s condition, and every deduction, including for salvage, must be measurable, itemized and stated in dollars. The basis must be fully explained to you.
Local market means local
For a car garaged in Bentonville, Rogers or Springdale, comparables should come from the Northwest Arkansas market where a replacement could really be bought. Distant listings are worth asking about.
How do I check whether a total loss offer is fair?
Ask for the valuation report itself, not just the summary letter, and read it against the car you actually owned. These are the inputs that most often do not match.
| Check | What to look for |
|---|---|
| Sales tax and fees | Included and shown separately from the vehicle value (§ 23-89-211) |
| Trim and options | Same trim level, engine, drivetrain and factory options as your car |
| Mileage | Comparables close to your mileage, with adjustments explained |
| Condition adjustments | Each deduction itemized in dollars and supported by documentation (Rule 43) |
| Location of comparables | From your local market, or dealer quotes if none are available |
| Deductible | Your policy deductible subtracted once, at the amount on your declarations page |
| Towing and storage | Paid by the insurer, not left with you at the yard |
Gather what documents your car’s condition: service records, receipts for recent work such as tires or brakes, dated photos and anything showing added options. Records either exist or they do not, which makes them useful evidence.
Does Arkansas total a car at 70 percent of its value?
Not as a rule for insurers. The 70 percent figure in Ark. Code § 27-14-2301 defines a salvage vehicle for titling. It does not require an insurer to declare a total loss at that point.
What the 70 percent rule does
Under § 27-14-2301, a salvage vehicle is one with damage equal to or above 70 percent of its average retail value, figured under criteria set by Office of Motor Vehicle rule. That definition decides how the title is branded afterward.
How the total loss decision is made
Whether a car is written off is generally an economic comparison under your policy: repair cost and salvage value against the car’s actual cash value. A car can be totaled below 70 percent when hidden damage or supplements are expected.
What to ask for instead
If you disagree with the decision itself, ask for the three numbers it was built from: the repair estimate, the salvage value and the actual cash value assigned. Each one can be requested and reviewed.
What should I do in the first week after my car is totaled?
None of these steps requires winning an argument, and all of them are available right away.
- Ask for the itemized breakdown in writing
Request the list § 23-89-211 requires, separating the vehicle value from the sales tax.
- Ask for the full valuation report
Request the report with the comparable vehicles, their mileage, trim and location, and every adjustment, not just the summary letter.
- Raise towing and storage early
Make sure the insurer is handling the fees before they accumulate.
- Find your policy’s appraisal provision
Many auto policies contain an appraisal clause: each side appoints an appraiser and an umpire settles any difference. It has costs and conditions, and your policy sets them out. Read it before you need it, and we will read it with you.
- Check your rental coverage
Rental reimbursement, if you carry it, usually has a daily and total limit. Know when it ends so you can plan the replacement.
- Contact the Insurance Department if needed
If the statutory requirements are not met, the Arkansas Insurance Department accepts consumer complaints.
What if I owe more on my car than the settlement pays?
A settlement pays what the car was worth, not what you owe on it. Those numbers differ whenever a loan has fallen behind the car’s depreciation, which is common on a long loan with a small down payment.
Gap coverage has to be in place beforehand
Gap coverage pays the difference between the settlement and your loan or lease balance, but it cannot be added after a loss. Our gap insurance guide explains when it earns its place.
Leases follow the lease agreement
For a leased car, the lease agreement, not the policy, decides what remains owed after a total loss. Many leases include gap protection; check yours.
Hail can total a car too
Enough hail damage can exceed an older car’s value. That is a comprehensive claim, and the same valuation rules apply. A liability-only policy pays nothing toward your own car. See does car insurance cover hail damage.
If the at-fault driver had no insurance
If you carry collision, it pays for your car regardless of fault, minus your deductible. Uninsured motorist property damage, if you bought it, applies to losses over a $200 deductible under § 23-89-404, which is waived in some situations. Our uninsured motorist guide explains it.
We cannot adjust the claim. We can read the policy with you.
Cribb Insurance Group is an independent agency in Bentonville serving Northwest Arkansas. Your insurance company adjusts and pays the claim, and we do not determine coverage or overrule a decision. What we can do is read your settlement letter and policy with you, point out what Arkansas requires to be in the payment, and help you set up the replacement car’s coverage across multiple insurance companies.
Ask Cribby about a total loss settlement
Cribby is Cribb Insurance Group’s AI assistant for general insurance questions. Start with one of these, or ask your own. For your own policy, talk with our team.
Want to see what your current policy says? Upload your auto declarations page to Coverage Compare. It shows your collision and comprehensive deductibles, rental reimbursement and whether gap coverage is listed, so you know what your policy brings to a total loss.
Use Coverage CompareTotaled car settlement questions
Does Arkansas require an insurer to pay sales tax on a totaled car?
Yes. Under Ark. Code § 23-89-211, an insurer settling a car as a total loss must include all applicable taxes, including sales taxes, and fees as provided in the Insurance Department’s rules. It must also give you an itemized list showing how much of the payment is for the vehicle’s value and how much is for the sales tax.
What happens if the insurer leaves those things out?
Section 23-89-211 says failing to meet its requirements is an unfair claims settlement practice under Arkansas’s unfair trade practices law (§ 23-66-206). You can ask for the itemized breakdown as a request that the statute be followed, and the Arkansas Insurance Department accepts consumer complaints when it is not.
Does Arkansas total a car at 70 percent of its value?
Not as a rule for insurers. Ark. Code § 27-14-2301 defines a salvage vehicle as one with damage equal to or above 70 percent of its average retail value, and that governs how the title is branded. Whether a car is totaled is generally an economic decision under the policy, and a car can be totaled below 70 percent.
Can the insurer leave me with the towing and storage bill?
Not on its own. Section 23-89-211 says an insurer may not abandon salvage to a towing or storage facility instead of paying the towing and storage fees without the consent of both the facility and you. Storage charges add up daily, so raise it early.
How is actual cash value worked out on a totaled car?
Under Insurance Department Rule 43, when your policy settles on actual cash value, the insurer either offers a comparable replacement vehicle and pays the taxes and fees, or pays the cost of a comparable vehicle in your local market minus the deductible, including taxes and fees. Any deduction must be itemized in dollars and explained. Ask for the full valuation report.
What can I do if I disagree with the valuation?
Start with the facts: compare the comparables’ trim, options, mileage and location with your car and send records that support a higher value. Many auto policies also include an appraisal clause with its own costs and conditions. The Arkansas Insurance Department accepts complaints when statutory requirements are not met. An agency does not adjust claims or overrule an insurer.
What if I owe more than the settlement pays?
The settlement pays what the car was worth, not what you owe, and the difference is yours unless gap coverage was already in place. Gap coverage cannot be added after the loss, so the decision belongs at the time you finance. A lease is governed by the lease agreement.
Sources we checked for this guide:
- Ark. Code § 23-89-211, total loss settlements
- Arkansas Insurance Department Rule 43, unfair claims settlement practices
- Ark. Code § 27-14-2301, salvage vehicle definition
- Ark. Code § 23-66-206, unfair trade practices
- Ark. Code § 23-89-404, uninsured motorist property damage
- Arkansas Insurance Department: file a complaint
Insurance answers you can understand. From a local agency you can know.
We believe good insurance decisions start with clear information. Our Northwest Arkansas insurance guides explain coverage, pricing considerations and policy differences in everyday language, so you can shop with greater confidence.
Send us the settlement letter. We will read it with you.
Send the settlement letter and your declarations page. We will show you what Arkansas requires to be in the payment and whether it is there, whether your policy includes an appraisal clause and what it says, and how to set up the replacement car’s coverage so the same gap does not open again.
A quote is an estimate. It is not a guarantee of final premium, coverage or eligibility. The insurance company sets the actual rate and the actual coverage terms after its underwriting review, and they may differ from any figure shown here. Cribb Insurance Group Inc is an independent insurance agency, not an insurance company. Your insurance company issues the policy and pays covered claims. Coverage cannot be bound, changed or cancelled through this website, email, social media or voicemail, and is not in force until Cribb Insurance Group Inc or the insurance company confirms it in writing. Coverage, eligibility, discounts and prices vary by insurance company, policy and individual situation. Cribb Insurance Group Inc, 1601 SW Regional Airport Blvd, Bentonville, AR 72713, (479) 286-1066.