Ark. Code Ann. § 23-79-104 (2026)
Insurable interest — Property
- No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured at the time of the effectuation of the insurance and at the time of the loss.
- “Insurable interest” as used in this section means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.
History. Acts 1959, No. 148, § 272; A.S.A. 1947, § 66-3205.
Case Notes
Construction.
Under this section, it is imperative that claimant show an insurable interest not only at the time the insurance went into effect, but at the time the loss occurred. Morse v. Morse, 60 Ark. App. 215, 961 S.W.2d 777 (1998).
Insurable Interest.
Property buyers who paid down payment on two houses, and were to pay the balance later, had an insurable interest within the meaning of this section when one of the houses burned down. Thurston Nat'l Ins. Co. v. Hays, 260 Ark. 855, 544 S.W.2d 853 (1977).
Where at the time of fire, the seller of machinery was still indebted for a portion of the original purchase price of the machine, he had an insurable interest in it and even if title had already passed to buyer prior to such fire such interest was not destroyed thereby. Hartford Fire Ins. Co. v. Stanley, 7 Ark. App. 94, 644 S.W.2d 628 (1983).
Bailee of automobile has an insurable interest, and redelivery of the vehicle does not necessarily terminate the bailment. Hinkle v. Perry, 296 Ark. 114, 752 S.W.2d 267 (1988).
Two parties can have independent insurable interests in one piece of property. Beatty v. USAA Cas. Ins. Co., 330 Ark. 354, 954 S.W.2d 250 (1997).
Where minor daughter had an insurable interest in the automobile, guardian's legal obligation to exercise prudence and due care in managing the estate of the minor gave the guardian an insurable interest in the automobile on behalf of the minor. Beatty v. USAA Cas. Ins. Co., 330 Ark. 354, 954 S.W.2d 250 (1997).
The plaintiffs had an insurable interest in a residence and the property therein, regardless of the fact that they were not the titled owners of the residence, where (1) they lived at the residence for several years prior to the fire and made improvements to the home by constructing a garage and a two-story addition, (2) title was placed in the names of the parents of one of the parties because the home was purchased while the parties were separated, but attempting a reconciliation, and (3) the plaintiffs actually paid all the mortgage payments, insurance, and taxes on the home, and also paid for the improvements to the property. Farm Bureau Mut. Ins. Co. v. Foote, 341 Ark. 105, 14 S.W.3d 512 (2000).
No Insurable Interest.
The confirmation of the foreclosure sale and the delivery of a commissioner's deed to the buyer had the effect of terminating appellant's insurable interest in the property. Marion v. Town & Country Mut. Ins. Co., 59 Ark. App. 120, 952 S.W.2d 681 (1997).
Creditor in bankruptcy proceeding had no “insurable interest” beyond the value of the collateral securing the loan creditor made to debtor. In re Gibson, 218 B.R. 900 (Bankr. E.D. Ark. 1998).
Where claimant was married at the time the house was insured, but divorced when the house, occupied by the ex-husband, was destroyed, claimant was not entitled to any of the insurance proceeds paid to the husband; claimant had no insurable interest in the house at the time of the loss. Morse v. Morse, 60 Ark. App. 215, 961 S.W.2d 777 (1998).
Payment of Proceeds.
Insurance proceeds are payable only to the person whose interest is covered by the policy, provided he has an insurable interest at the time of the making of the contract and at the time of the loss. Wilbanks & Wilbanks, Inc. v. Cobb, 269 Ark. 936, 601 S.W.2d 601 (Ct. App. 1980).
Cited: Gravning v. American Druggists' Ins. Co., 259 Ark. 523, 534 S.W.2d 754 (1976); Adams v. Allstate Ins., 723 F. Supp. 111 (E.D. Ark. 1989); Colonia Underwriters Ins. Co. v. Worthen Nat'l Bank, 53 Ark. App. 106, 919 S.W.2d 515 (1996); Hartford Ins. Co. v. Brewer, 54 Ark. App. 1, 922 S.W.2d 360 (1996).