Ark. Code Ann. § 23-79-208 (2026)

Research References

ALR.

What constitutes bad faith on part of insurer rendering it liable for statutory penalty imposed for bad faith in failure to pay, or delay in paying, insured's claim — Particular conduct of insurer. 115 A.L.R.5th 589.

What constitutes bad faith on part of insurer rendering it liable for statutory penalty imposed for bad faith in failure to pay, or delay in paying, insured's claim — Particular grounds for denial of claim: matters relating to policy. 116 A.L.R.5th 247.

What constitutes bad faith on part of insurer rendering it liable for statutory penalty imposed for bad faith in failure to pay, or delay in paying, insured's claim — Particular grounds for denial of claim: risks, causes, and extent of loss, injury, disability, or death. 123 A.L.R.5th 259.

Validity, Construction, and Application of State Vexatious Litigant Statutes. 45 A.L.R.6th 493.

Ark. L. Notes.

Brill, A Primer on Judgment and Pre-Judgment Interest in Arkansas, 1989 Ark. L. Notes 1.

Copeland, A Brief Survey of Some Important 1990 Insurance Law Decisions, 1991 Ark. L. Notes 75.

Copeland, A Brief Survey of Some Important 1991 and 1992 Insurance Law Decisions, 1992 Ark. L. Notes 85.

Ark. L. Rev.

Holmes, Third Party Insurance Excess Liability and Its Avoidance, 34 Ark. L. Rev. 525.

Notes, Aetna v. Broadway Arms: The Tort of Bad Faith, 38 Ark. L. Rev. 462.

U. Ark. Little Rock L.J.

Bassett, Survey of Arkansas Law: Insurance, 2 U. Ark. Little Rock L.J. 247.

Arkansas Law Survey, Stewart, Insurance, 8 U. Ark. Little Rock L.J. 183.

Casey, Bad Faith in First Party Insurance Contracts — What's Next?, 8 U. Ark. Little Rock L.J. 237.

Survey, Insurance, 14 U. Ark. Little Rock L.J. 379.

Seventeenth Annual Survey of Arkansas Law — Insurance, 17 U. Ark. Little Rock L.J. 451.

Case Notes

Constitutionality.

Former section did not violate due process or equal protection clause even though construed as imposing liability where refusal is in good faith and on reasonable grounds. Missouri State Life Ins. Co. v. Fodrea, 185 Ark. 155, 46 S.W.2d 638 (1932); Life & Casualty Ins. Co. v. McCray, 291 U.S. 566, 54 S. Ct. 482, 78 L. Ed. 987 (1934); Missouri State Life Ins. Co. v. Brown, 188 Ark. 1136, 69 S.W.2d 1075 (1934) (decision under prior law).

Construction.

Former section was highly penal and should be strictly construed. National Fire Ins. Co. v. Kight, 185 Ark. 386, 47 S.W.2d 576 (1932); LaSalle Fire Ins. Co. v. Jenkins, 185 Ark. 484, 47 S.W.2d 792 (1932); Sun Life Assurance Co. v. Coker, 187 Ark. 602, 61 S.W.2d 447 (1933); National Old Line Ins. Co. v. Russell, 188 Ark. 632, 67 S.W.2d 195 (1934); Taylor v. Mutual Life Ins. Co., 193 Ark. 251, 98 S.W.2d 944 (1936); Broadaway v. Home Ins. Co., 203 Ark. 126, 155 S.W.2d 889 (1941); United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955); Tollett v. Phoenix Assurance Co., 147 F. Supp. 597 (W.D. Ark. 1956) (preceding decisions under prior law).

For cases decided prior to the 1991 amendment holding that, since this section was penal in nature, it must be strictly construed; and/or the plaintiff must recover the exact amount claimed, in order to collect the penalty and attorneys' fees, see Miller's Mut. Ins. Co. v. Keith Smith Co., 284 Ark. 124, 680 S.W.2d 102 (1984); Cato v. Arkansas Mun. League Mun. Health Benefit Fund, 285 Ark. 419, 688 S.W.2d 720 (1985); Stuckey v. Time Ins. Co., 669 F. Supp. 261 (E.D. Ark. 1987), aff'd without op., 860 F.2d 1084 (8th Cir. Ark. 1988)Limited byHall v. Modern Woodmen of Am., 882 F. Supp. 830 (E.D. Ark. 1994); Credit Gen. Ins. Co. v. Atlas Asphalt, Inc., 304 Ark. 522, 803 S.W.2d 903 (1991).

The Arkansas Supreme Court has construed this section to allow insurers to conduct a reasonable and timely investigation, and the district court did not err in concluding that the exception continues to apply even when the mandatory two-month period of § 23-81-113(b) governs the payment of the insurance claim. McKee v. Federal Kemper Life Assurance Co., 927 F.2d 326 (8th Cir. Ark. 1991).

This section, being penal in nature, is strictly construed. State Farm Mut. Auto. Ins. Co. v. Thomas, 316 Ark. 345, 871 S.W.2d 571 (1994).

Subsection (d) of this section, being penal in nature, is strictly construed. National Std. Ins. Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998).

Purpose.

Former section was not intended to penalize an insurer for policies written and matured in another state. Business Men's Accident Ass'n v. Cowden, 131 Ark. 419, 199 S.W. 108 (1917); Inter-Ocean Cas. Co. v. Warfield, 173 Ark. 287, 292 S.W. 129 (1927); New York Life Ins. Co. v. Miller, 139 F.2d 657 (8th Cir. 1944) (preceding decisions under prior law).

Former section was part of a contract of insurance and was to reimburse the plaintiff for expenses incurred in enforcing the contract. Sun Life Assurance Co. v. Coker, 187 Ark. 602, 61 S.W.2d 447 (1933) (decision under prior law).

Recoveries for penalty and fees were intended to prevent defenses for delay or other vexatious litigation, and as a restraint against unreasonable contentions of the insured, for he may not recover these items unless he recovers first the amount sought by suit (now within 20% of amount demanded or sought in the suit). John Hancock Mut. Life Ins. Co. v. Magers, 199 Ark. 104, 132 S.W.2d 841 (1939) (decision under prior law).

The General Assembly did not intend to impose a penalty on an insurer for exercising its right to timely seek a new trial or timely obtain appellate review, but instead, the penalty nature of this section is directed against unwarranted delaying tactics of insurers. Simmons First Nat'l Bank v. Liberty Mut. Ins. Co., 282 Ark. 194, 667 S.W.2d 648 (1984).

The penalty nature of this section is directed against unwarranted delaying tactics of insurers. State Farm Mut. Auto. Ins. Co. v. Thomas, 316 Ark. 345, 871 S.W.2d 571 (1994).

Courts interpret the statute as providing that in the event an insurer wrongfully refuses to pay benefits under an insurance policy, the insured may recover the overdue benefits, 12 percent damages upon the amount of the loss, and reasonable attorney fees. The purpose of the statute is to punish the unwarranted delaying tactics of insurance companies. State Farm Fire & Cas. Co. v. Andrews, 363 Ark. 67, 210 S.W.3d 896 (2005).

Applicability.

Former section was applicable to a suit brought by an insurance company to cancel insured's policy, where defendant by counterclaim recovered for disability from insanity. Old Colony Life Ins. Co. v. Julian, 175 Ark. 359, 299 S.W. 366 (1927) (decision under prior law).

Former section applied to stipulated premium companies. Old Am. Ins. Co. v. Hartsell, 176 Ark. 666, 4 S.W.2d 25 (1928) (decision under prior law).

Former section was inapplicable to liability insurance companies. Standard Accident Ins. Co. v. Philpot Constr. Co., 183 Ark. 694, 38 S.W.2d 26 (1931) (decision under prior law).

An insurance company insuring automobiles against loss by fire was a fire insurance company. LaSalle Fire Ins. Co. v. Jenkins, 185 Ark. 484, 47 S.W.2d 792 (1932) (decision under prior law).

The statutory penalty against an insurer was applicable to the breach of a policy providing for a weekly benefit in case of permanent disability from sickness. National Life & Accident Ins. Co. v. Sims, 187 Ark. 969, 63 S.W.2d 524 (1933) (decision under prior law).

Where a certificate under a group policy was delivered to the insured in Arkansas and it was not effective until delivered, former section applied although the insurer and the holder of the group policy were nonresidents. Metropolitan Life Ins. Co. v. Harper, 189 Ark. 170, 70 S.W.2d 1042 (1934) (decision under prior law).

Where the parties of a life policy were both foreign and from different states and the policy was payable in insurer's home state and was delivered and matured in insured's home state, former section was not applicable. New York Life Ins. Co. v. Miller, 139 F.2d 657 (8th Cir. 1944) (decision under prior law).

If any insurance came within a type of insurance specified by the statute as such type was defined by the insurance law, such insurance was covered by the provisions of former statute. Liverpool & London & Globe Ins. Co. v. Jones, 207 Ark. 237, 180 S.W.2d 519 (1944) (decision under prior law).

This section applies to an action on a bond executed under a United States statute where the statute under which it is executed is silent on the question of interest, penalty, and attorney's fees. United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955); Lewis v. Goldsborough, 234 F. Supp. 524 (E.D. Ark. 1964) (decision under prior law).

Notwithstanding that insurance policy is a foreign contract, if it matures in Arkansas and action thereon is brought in Arkansas, the Arkansas statute providing for attorney's fees and penalties applies. Aetna Cas. & Sur. Co. v. Simpson, 228 Ark. 157, 306 S.W.2d 117 (1957); State Farm Mut. Auto. Ins. Co. v. Fuller, 232 Ark. 329, 336 S.W.2d 60 (1960) (preceding decisions under prior law).

Former section applied to mutual aid associations. Farmers Union Mut. Ins. Co. v. Myers, 234 Ark. 1061, 356 S.W.2d 423 (1962) (decision under prior law).

The factoring agreement between the parties was not an insurance contract but a contract for the purpose of purchasing accounts receivable, thus appellees were not entitled to the penalty and attorney's fee required by this section. Manhattan Factoring Corp. v. Orsburn, 238 Ark. 947, 385 S.W.2d 785 (1965).

The provisions of this section do not extend to declaratory judgment proceedings. Mid-South Ins. Co. v. Dellinger, 239 Ark. 169, 388 S.W.2d 6 (1965).

This section will apply in an action on an accident insurance policy when the insured was living in this state when the policy was issued. New Empire Life Ins. Co. v. Bowling, 241 Ark. 1051, 411 S.W.2d 863 (1967).

Workmen's compensation insurance covering employees which do not come within the Arkansas Workmen's Compensation Law is a form of casualty insurance and as such is included in this section. Empire Life & Hosp. Ins. Co. v. Armorel Planting Co., 247 Ark. 994, 449 S.W.2d 200 (1970).

Statutory penalty and attorney's fee have been allowed only in cases having a connection with this state, and are not allowed on an uninsured motorist policy maturing outside of Arkansas and issued in another state to a nonresident. Allstate Ins. Co. v. Ormand, 252 Ark. 773, 480 S.W.2d 939 (1972).

This section applied to cases in which the insured recovered money judgment and was not pertinent where a principal merely prevailed in an action by his surety to recover amount of claim paid by surety. Fireman's Fund Ins. Co. v. Clark, 253 Ark. 1025, 490 S.W.2d 447 (1973).

This section has been applied to sureties on contractor's bonds, where the sureties contended the proper demand to justify allowance of penalty and attorneys' fees had not been made. Ray Ross Constr. Co. v. Raney, 266 Ark. 606, 587 S.W.2d 46 (1979); R.J. “Bob” Jones Excavating Contractor v. Firemen's Ins. Co., 324 Ark. 282, 920 S.W.2d 483 (1996).

This section applies regardless of whether the late payment is made to the insured or insured's mortgagee. Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ct. App. 1980).

This section did not apply where the contract between employer and insurer was a contract to provide insurance coverage to employees, not to the employer; the employees were the policy holders of whatever policies existed under this agreement, and, moreover, the basis of employer's lawsuit was breach of contract because insurer overcharged employer for insurance claims paid by insurer. P.A.M. Transp., Inc. v. Arkansas Blue Cross & Blue Shield, 315 Ark. 234, 868 S.W.2d 33 (1993).

In former employee's action against her employer's insurance company for breach of contract in failing to pay disability benefits, the employee's claim for assessment of a 12 percent penalty pursuant to this section was preempted by ERISA. Burkett v. Sun Life Assurance Co. of Can., 958 F. Supp. 432 (E.D. Ark. 1997).

District court properly ruled that appellant was entitled to prejudgment interest and certain costs, but that appellant was not entitled to attorneys' fees or the 12 percent penalty because it had failed to meet the requirements of this section, which authorized fees and penalties in insurance cases. Southern Pine Helicopters, Inc. v. Phoenix Aviation Managers, Inc., 358 F.3d 1086 (8th Cir. 2004).

Where life insurance company was faced with legitimate claims from both the widow and the former wife, who was still the named beneficiary, the protection offered by § 23-79-125(b) was not available because payment to the widow would not have discharged it from having to pay a claim from the former wife. Primerica Life Ins. Co. v. Watson, 362 Ark. 54, 207 S.W.3d 443 (2005).

Trial court's award of 12 percent penalty against insurer was warranted when injured driver was forced to file suit against her own insurer after she had demanded payment. Nationwide Mut. Ins. Co. v. Cumbie, 92 Ark. App. 448, 215 S.W.3d 694 (2005).

Recovery of attorney's fees to insureds in an insurance-contract action is exclusively available under this section, and an award under § 16-22-308 is prohibited; because § 16-22-308 does not contain a condition on a fee award, this section falls squarely within § 16-22-308's exception that it does not apply when attorney's fees are “otherwise provided by law.” Gafford v. Allstate Ins. Co., 2015 Ark. 110, 459 S.W.3d 277 (2015).

Amount.

The allowance of the statutory penalty and attorney's fees is penal in nature and is a procedural matter governed by the laws of the State of Arkansas. USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988).

Attorney's fees, 12% penalty, and interest awarded to materialman who recovered a verdict against surety on a contractor's bond. General Elec. Supply Co. v. Downtown Church of Christ, 24 Ark. App. 1, 746 S.W.2d 386 (1988).

Attorney's fee award of over $10,000 on a claim valued at $1,646 upheld. Parker v. Southern Farm Bureau Cas. Ins. Co., 326 Ark. 1073, 935 S.W.2d 556 (1996).

Trial court did not err in awarding attorney fees to an insured under subdivision (a)(1) of this section based on a percentage of its recovery against an insurer under a crop insurance policy where there was no indication in the trial court's decision that the existence of a contingency-fee agreement dominated over the other reasonableness factors. Running M Farms, Inc. v. Farm Bureau Mut. Ins. Co. of Ark., 371 Ark. 308, 265 S.W.3d 740 (2007).

In insurance cases involving this section, the attorney fee awarded should not exceed the amount that the client is responsible for paying, otherwise the statute will be susceptible to abuse. Running M Farms, Inc. v. Farm Bureau Mut. Ins. Co. of Ark., 371 Ark. 308, 265 S.W.3d 740 (2007).

It was not appropriate to remand a class action suit by Arkansas insureds against insurers for underpaying claims to state court because the insurers met the burden of showing the amount in controversy exceeded $5 million, based on, inter alia, potential attorney's fees of 40 percent, under subdivision (a)(1) of this section. Basham v. American Nat'l County Mut. Ins. Co., 979 F. Supp. 2d 883 (W.D. Ark. 2013).

—Attorney's Fees.

The allowance for attorney's fee must be reasonable. Merchants' Fire Ins. Co. v. McAdams, 88 Ark. 550, 115 S.W. 175 (1908); Colorado Life Co. v. Steele, 95 F.2d 535 (8th Cir. 1938) (preceding decisions under prior law); Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974).

Former section contemplated the employment of only one competent attorney and it was error to allow fees to two different attorneys. Mutual Life Ins. Co. v. Owen, 111 Ark. 554, 164 S.W. 720 (1914); Aetna Life Ins. Co. v. Heiden, 184 Ark. 291, 42 S.W.2d 392 (1931); Franklin Life Ins. Co. v. Burgess, 219 Ark. 834, 245 S.W.2d 210 (1952) (preceding decisions under prior law).

Attorney's fee held reasonable. Commercial Cas. Ins. Co. v. McCulley, 185 Ark. 468, 48 S.W.2d 225 (1932); Missouri State Life Ins. Co. v. Barron, 186 Ark. 46, 52 S.W.2d 733 (1932); Coal Operators Cas. Co. v. F.S. Neely Co., 219 Ark. 579, 243 S.W.2d 744 (1951); Universal Life & Accident Ins. Co. v. Stuart, 219 Ark. 863, 245 S.W.2d 219 (1952); New York Life Ins. Co. v. Thweatt, 221 Ark. 478, 254 S.W.2d 68 (1953); Union Life Ins. Co. v. Epperson, 221 Ark. 522, 254 S.W.2d 311 (1953); United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955); Equitable Life Assurance Soc'y v. Gordy, 228 Ark. 643, 309 S.W.2d 330 (1958); Great Am. Indem. Co. v. State ex rel. Ark. Bitumuls Co., 231 Ark. 181, 328 S.W.2d 504 (1959) (preceding decisions under prior law); Haskins v. Occidental Life Ins. Co., 349 F. Supp. 1192 (E.D. Ark. 1972); Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976); New Hampshire Ins. Co. v. Quilantan, 269 Ark. 359, 601 S.W.2d 836 (1980); Southall v. Farm Bureau Mut. Ins. Co., 283 Ark. 335, 676 S.W.2d 228 (1984); Shepherd v. State Auto Property & Cas. Ins. Co., 312 Ark. 502, 850 S.W.2d 324 (1993).

Reasonable attorneys' fees means such a fee as would be reasonable for a litigant to pay his attorney for prosecuting the case, and not a speculative or contingent fee based upon the uncertainty of the result of the litigation. Metropolitan Life Ins. Co. v. Leach, 198 Ark. 531, 129 S.W.2d 588 (1939) (decision under prior law).

A reasonable fee is to be determined by the particular circumstances that appear, it should not only be commensurate with time and amount of work required but also with the ability present and necessary to take care of or meet the issues that arise, it should not be so low, that well prepared attorneys would avoid that case of litigation, but should be for the purpose of compensating the insured in engaging counsel thoroughly competent to protect his interest. John Hancock Mut. Life Ins. Co. v. Magers, 199 Ark. 104, 132 S.W.2d 841 (1939) (decision under prior law).

Attorney's fee allowed held excessive. Metropolitan Life Ins. Co. v. Leach, 198 Ark. 531, 129 S.W.2d 588 (1939); Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974) (decision under prior law).

Fees earned in successfully defending a counterclaim for an implied breach of warranty were not includible, since the purpose of former section was only to reimburse the expenses incurred in enforcing the contract. United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955) (decision under prior law).

Additional fee may be taxed on appeals. Farm Bureau Mut. Ins. Co. v. Cusick, 235 Ark. 27, 356 S.W.2d 740 (1962); Southern Farm Bureau Cas. Ins. Co. v. Gooding, 263 Ark. 435, 565 S.W.2d 421 (1978); Stafford v. Southern Farm Bureau Cas. Ins. Co., 457 F.2d 366 (8th Cir. 1972).

Attorney fees are allowed only to reimburse an insurance policy holder or beneficiary for expenses incurred in enforcing the contract and to compensate in engaging counsel thoroughly competent to protect his interest. Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974).

There is no fixed formula or policy to be considered in arriving at attorney fees other than the rule that the appropriately broad discretion of the trial court in such matters must not be abused. Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974).

An allowance for an attorney fee should not be speculative or contingent but should be such a fee as would be reasonable for a litigant to pay his attorney for prosecuting such a case, however, the amount which the beneficiary receives is an element to be considered along with the difficulty of the issues. Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974).

An allowance of attorney fees must be affirmed unless it is demonstrated, or the record shows, that the allowance is excessive. Equitable Life Assurance Soc'y v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974).

Attorney's fees awarded would not be reversed absent a showing by the other party that the allowance was excessive, inadequate or unreasonable. Farm Bureau Mut. Ins. Co. v. Kizziar, 1 Ark. App. 84, 613 S.W.2d 401 (1981).

The computation of allowable attorney's fees is governed by factors which include the experience and ability of the attorney, the time and work required of him, the amount involved in the case, the results obtained, the fee customarily charged in the locality for similar legal services, and whether the fee is fixed or contingent; while courts should be guided by these factors, there is no fixed formula to be used in determining the reasonableness of a fee. Southall v. Farm Bureau Mut. Ins. Co., 283 Ark. 335, 676 S.W.2d 228 (1984); Miller's Mut. Ins. Co. v. Keith Smith Co., 284 Ark. 124, 680 S.W.2d 102 (1984); State Farm Fire & Cas. Co. v. Stockton, 295 Ark. 560, 750 S.W.2d 945 (1988); Northwestern Nat'l Life Ins. Co. v. Heslip, 309 Ark. 319, 832 S.W.2d 463 (1992).

In awarding a reasonable attorney's fee, the court's duty is to fix a fee that is reasonable; automatic acceptance of a lawyer's contract with a client would be an abdication of court's duty to supervise the conduct of the bar and do justice to the losing, as well as the winning, side. Southall v. Farm Bureau Mut. Ins. Co., 283 Ark. 335, 676 S.W.2d 228 (1984); State Farm Fire & Cas. Co. v. Stockton, 295 Ark. 560, 750 S.W.2d 945 (1988).

The award of an attorney's fee is a matter for the sound discretion of the trial court and in the absence of abuse, its judgment will be sustained on appeal. Southall v. Farm Bureau Mut. Ins. Co., 283 Ark. 335, 676 S.W.2d 228 (1984); Arkansas Blue Cross & Blue Shield v. Remagen, 25 Ark. App. 96, 752 S.W.2d 284 (1988).

Attorney's fees are awarded under this section, not as property of the attorney, but by way of indemnity to the litigant. Arkansas Blue Cross & Blue Shield, Inc. v. Doe, 22 Ark. App. 89, 733 S.W.2d 429 (1987).

Plaintiff who was litigant, advocate, and witness was entitled to attorney's fees. Arkansas Blue Cross & Blue Shield, Inc. v. Doe, 22 Ark. App. 89, 733 S.W.2d 429 (1987).

Trust specifically afforded an exemption from the provisions of the Insurance Code pursuant to § 23-61-502(3) was not subject to the imposition of the statutory penalty and attorney's fees provided in subsection (a). Arkansas Poultry Fed'n Ins. Trust v. Lawrence, 34 Ark. App. 45, 805 S.W.2d 653 (1991).

The standard of review with regard to the reasonableness of attorney's fees awarded by the trial court is one of abuse of discretion, and the trial court is to consider a number of factors in addition to the number of hours worked. Northwestern Nat'l Life Ins. Co. v. Heslip, 309 Ark. 319, 832 S.W.2d 463 (1992).

In the amendment to this section by Acts 1991, No. 349, the legislature plainly stated that, to recover the twelve-percent penalty and attorneys' fees, an insured must recover within twenty percent of the amount he demands or seeks in the suit. National Std. Ins. Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998).

The factors for determining the amount of attorneys' fees and costs to be awarded on an appeal are the same as the factors for determining the amount of attorneys' fees and costs to be awarded after a trial. Newcourt Fin., Inc. v. Canal Ins. Co., 341 Ark. 452, 17 S.W.3d 83 (2000).

The court properly set the plaintiff's attorney's fee at one-third of the judgment and penalty awarded to the plaintiff, notwithstanding the assertion that the number of hours worked required a larger fee, since the attorney took the case on a contingency fee, the attorney did not have accurate records of his time, and a fee award should not exceed the amount that the client is responsible for paying. Phelps v. United States Credit Life Ins. Co., 340 Ark. 439, 10 S.W.3d 854 (2000).

The district court did not abuse its discretion in awarding $ 125,000 in attorneys' fees to the plaintiffs where the court considered one affidavit which set forth the plaintiff's contingent fee agreement whereby the expected fee would be one-third of the $ 500,000 policy limits, or $ 166,667, and another affidavit which set forth an effective hourly rate of $ 350 for plaintiff's cases and estimated the amount of time spent on the matter at 250-300 hours, plus 90-100 hours by an associate attorney, plus an additional 20 hours by a paralegal. Fuller v. Hartford Life Ins. Co., 281 F.3d 704 (8th Cir. 2002).

—Damages.

Award Improper.

Fact that the amount awarded in a dispute over insurance proceeds after a fire was within 20 percent of the amount demanded by insured was of no significance because the amount awarded was the exact amount tendered by insurer and rejected; therefore, an award of attorney's fees under this section was improper. State Farm Fire & Cas. Co. v. Andrews, 363 Ark. 67, 210 S.W.3d 896 (2005).

Assessment of penalty in excess of statutory amount was erroneous. Providence Washington Ins. Co. v. McKenzie, 221 Ark. 235, 252 S.W.2d 627 (1952) (decision under prior law).

Trial court erred in awarding attorney fees and penalties to an insured under § 23-79-208(a)(1) in an action to recover the full amount of a homeowner's policy where the insurer did not wrongfully refuse to pay the claim or engage in unwarranted delaying tactics. The only disputed issue was the amount of the claim. State Farm Fire & Cas. Co. v. Andrews, 363 Ark. 67, 210 S.W.3d 896 (2005).

When an innocent spouse's husband burned down the parties' house and died by suicide inside the house, it was error to award the spouse damages against an insurer who denied the spouse's claim under the policy's intentional acts exclusion because the spouse was not entitled to judgment against the insurer. Shelter Mut. Ins. Co. v. Lovelace, 2020 Ark. 93, 594 S.W.3d 84 (2020).

Confession of Judgment.

Where an insurance company offers to confess judgment for the sum named in the face of the policy less the amount of any premium due thereon, neither the insured nor his assignee can recover the penalty and attorney's fee. Fulmer v. East Ark. Abstract & Loan Co., 173 Ark. 668, 293 S.W. 1018 (1927) (decision under prior law).

Attorneys' fees and penalty attach if insured is compelled to file suit even though the judgment may be confessed before trial. Commercial Union Assurance Co. v. Leftwich, 191 Ark. 656, 87 S.W.2d 55 (1935); Equitable Life Assurance Soc'y v. Gordy, 228 Ark. 643, 309 S.W.2d 330 (1958); Continental Cas. Co. v. Vardaman, 232 Ark. 773, 340 S.W.2d 277 (1960) (preceding decisions under prior law); Federal Life & Cas. Co. v. Weyer, 239 Ark. 663, 391 S.W.2d 22 (1965); Farm Bureau Mut. Ins. Co. v. David, 324 Ark. 387, 921 S.W.2d 930 (1996).

Insured cannot file suit for amount less than theretofore demanded and collect the statutory penalty and attorney's fee if the insurance company timely offers to confess judgment and tenders into court the amount sued for, plus interests and costs to date of tender. Broadaway v. Home Ins. Co., 203 Ark. 126, 155 S.W.2d 889 (1941) (decision under prior law).

Where, after all the evidence was in, appellant offered to confess judgment for the full face value of the policies, there was no error in court's action in directing jury to return verdict for plaintiff and then adding statutory penalty and attorney's fee. Farm Bureau Mut. Ins. Co. v. Cusick, 235 Ark. 27, 356 S.W.2d 740 (1962).

Where the insurer previously refused to pay the correct amount claimed, the penalty and attorneys' fees were correctly assessed, even though the insurer later confessed judgment. Miller's Mut. Ins. Co. v. Keith Smith Co., 284 Ark. 124, 680 S.W.2d 102 (1984).

Where an insurance company confessed judgment in the correct amount before the claimant filed an amended complaint asking for the correct amount, the statutory penalty and attorney's fees did not attach. Garrett v. American Fid. Assurance Co., 305 Ark. 74, 805 S.W.2d 78 (1991).

Attorney's fee and penalty attach if the insured is required to file suit, even though judgment is confessed before trial. Farm Bureau Ins. Co. of Ark., Inc. v. Running M Farms, Inc., 366 Ark. 480, 237 S.W.3d 32 (2006).

Costs.

The attorney's fee is given as a penalty to reimburse the policyholder for expenses incurred in enforcing the contract of indebtedness and is taxed as costs in the case and therefore is a part of the recovery against the insurance company. Vaughan v. Humphreys, 153 Ark. 140, 239 S.W. 730 (1922) (decision under prior law).

Provision in policy providing that any judgment creditor of insured can recover to the extent of the insurance afforded by the policy, does not constitute a limitation as to penalty and attorney fees, since penalty and attorney fees under the act are classed as part of the costs. Traders & Gen. Ins. Co. v. Powell, 177 F.2d 660 (8th Cir. 1949) (decision under prior law).

Objections to the trial court's award of costs must be raised in the trial court by a motion to amend the judgment pursuant to ARCP 52(b). Farm Bureau Mut. Ins. Co. v. David, 324 Ark. 387, 921 S.W.2d 930 (1996).

Under this section, if successful on her claim, the insured was entitled to her gross monthly benefit of $2,197.15 for a period of 25 months, four months of which had previously been paid by the insurer; thus, an award was proper even though no specific amount was set forth in the complaint, and the fact that the amount of benefits may be ultimately subject to offsets did not preclude recovery. Unum Life Ins. Co. of Am. v. Edwards, 362 Ark. 624, 210 S.W.3d 84 (2005).

Counterclaims.

Nothing in § 23-79-209 would prevent the allowance of the 12% penalty upon a counterclaim for a loss. Home Ins. Co. v. Crawford, 251 Ark. 843, 475 S.W.2d 889 (1972).

Declaratory Judgment.

In a declaratory judgment action, the awarding of attorney's fees is proper under § 23-79-209, which does not provide for the 12% penalty set forth in this section. Silverball Amusement, Inc. v. Utah Home Fire Ins. Co., 842 F. Supp. 1151 (W.D. Ark.), aff'd, 33 F.3d 1476 (8th Cir. Ark. 1994).

This section, rather than § 23-79-209, applied to an action commenced by an insurance company seeking a declaratory judgment that it owed nothing under a motor vehicle policy, where the defendant financial institution (which had loaned money to the insured to purchase the vehicle) filed a counterclaim seeking the policy proceeds and was successful on that counterclaim. Newcourt Fin., Inc. v. Canal Ins. Co., 67 Ark. App. 347, 1 S.W.3d 452 (1999).

Defense or Justification.

Former section did not apply where the company was prevented from making payment by writs of garnishment sued out by plaintiff's creditors. North State Fire Ins. Co. v. Dillard, 88 Ark. 473, 115 S.W. 154 (1908) (decision under prior law).

Former section did not make the liability of the company depend upon its good faith in contesting the matter. American Liberty Mut. Ins. Co. v. Washington, 183 Ark. 497, 36 S.W.2d 963 (1931); Life & Cas. Ins. Co. v. McCray, 187 Ark. 49, 58 S.W.2d 199 (1933), aff'd, 291 U.S. 566, 54 S. Ct. 482, 78 L. Ed. 987 (1934); Life & Cas. Ins. Co. v. Barefield, 187 Ark. 676, 61 S.W.2d 698 (1933), aff'd, 291 U.S. 575, 54 S. Ct. 486 (1934); Missouri State Life Ins. Co. v. Martin, 188 Ark. 907, 69 S.W.2d 1081 (1934) (preceding decisions under prior law).

Where a disability claim under a policy covering disability and death benefits had arisen before the insured's death and was in dispute and the insurer admitted liability for the death but refused to pay unless the policy was surrendered as provided in the policy, the insurer was liable for the statutory penalty and attorney's fee although the insured refused to surrender the policy until the claim for disability benefits was settled and had offered to receive the death benefits and execute an acquittance therefor. Equitable Life Assurance Soc'y v. Felton, 189 Ark. 327, 72 S.W.2d 225 (1934) (decision under prior law).

Good faith of insurer is not a valid defense. Life & Cas. Ins. Co. v. Wiggins, 224 Ark. 377, 273 S.W.2d 405 (1954); United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955); Willis-Reed Lumber Co. v. New York Underwriters Ins. Co., 146 F. Supp. 74 (W.D. Ark. 1956); Tollett v. Phoenix Assurance Co., 147 F. Supp. 597 (W.D. Ark. 1956)(preceding decisions under prior law). But seeMissouri State Life Ins. Co. v. King, 186 Ark. 983, 57 S.W.2d 400 (1933); Taylor v. Mutual Life Ins. Co., 193 Ark. 251, 98 S.W.2d 944 (1936) (preceding decisions under prior law).

Filing and prosecuting action by insurer against insured for claims it alleges insured owes consitituted no justification for withholding payment on the policies and they are liable for the statutory penalty and attorney's fee. American Equitable Assurance Co. v. Showers, 195 Ark. 521, 113 S.W.2d 91 (1938) (decision under prior law).

Where due to statute of limitations insurer was not liable for amount sought by insured in original complaint, but only for amount sought in amended complaint, did not excuse insurer from duty to pay penalty and attorney's fee under this section. Equitable Life Assurance Soc'y v. Gordy, 228 Ark. 643, 309 S.W.2d 330 (1958) (decision under prior law).

Where the reason for the delay in payment was the inability of the insurer to come to terms with the mortgagee as to the insurer's rights in the mortgaged property upon payment to mortgagee there was no justification for the delay in payment. Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ct. App. 1980).

Insurer who had all the pertinent information within a few days of receipt of the proof of loss, and who received the sworn statement of claimant within the sixty-day period stipulated in the contract, could not successfully argue that delay by the claimant should prevent the assessment of penalties under this section. Farm Bureau Mut. Ins. Co. v. David, 324 Ark. 387, 921 S.W.2d 930 (1996).

Trial court's decision to award an attorney's fee and court costs and impose a penalty and interest was clearly erroneous where the insurer did not deny the insured's claim but rather requested verification and, once provided with the information, promptly paid benefits. American Underwriters Ins. Co. v. Turner, 57 Ark. App. 169, 944 S.W.2d 129 (1997).

Trial court erred in assessing a penalty and attorney's fees against life insurance company pursuant because it had not engage in unwarranted delaying tactics; it stood ready to pay the claim but was faced with legitimate claims from both the widow and the former wife, who was still the named beneficiary, and it was for the court to decide who was the beneficiary. Primerica Life Ins. Co. v. Watson, 362 Ark. 54, 207 S.W.3d 443 (2005).

Good faith denial of liability is no defense to a claim for attorney's fee and penalty under subdivision (a)(1) of this section. Farm Bureau Ins. Co. of Ark., Inc. v. Running M Farms, Inc., 366 Ark. 480, 237 S.W.3d 32 (2006).

Insured was not entitled to a statutory penalty and attorney's fees based on an insurer's delay in paying the insured's mortgage; it was clear that the delay was initially caused by the mortgage company's failure to furnish proper and necessary information and later by the insured's refusal to consent to the company's use of the funds paid by the insurer to pay the mortgage. Jackson v. Allstate Ins. Co., 785 F.3d 1193 (8th Cir. 2015).

Demand.

Finding that a demand for payment was made before suit and that there was a refusal to make payment was warranted and the court was justified in assessing a penalty and attorney's fees. Metropolitan Life Ins. Co. v. Shane, 98 Ark. 132, 135 S.W. 836 (1911) (decision under prior law).

Former section did not require a demand other than the filing of suit, and allowance of statutory penalty and attorney's fee was proper in action by subcontractor against surety of public contractor even though there had been no previous demand. Trinity Universal Ins. Co. v. Smithwick, 222 F.2d 16 (8th Cir.), cert. denied, 350 U.S. 837, 76 S. Ct. 74, 100 L. Ed. 747 (1955) (decision under prior law).

Filing of counterclaim by prime contractor and its subsidiaries against subcontractor and its surety for damages allegedly caused by subcontractor's refusal to complete subcontract operated as a demand upon surety, making surety liable for statutory penalty and attorney's fees. Reid v. Miles Constr. Corp., 307 F.2d 214 (8th Cir. 1962) (decision under prior law).

Where demand is made and liability under the contract is established attorneys' fees and penalty attached in absence of showing by insurance carrier that its actions come within exceptions to liability for such fees and penalty. Federal Life & Cas. Co. v. Weyer, 239 Ark. 663, 391 S.W.2d 22 (1965).

No “formal” demand on insurer need be made, and where there was evidence in the record from which the court could have concluded that an informal demand was made the insured was not precluded from obtaining the statutory penalty and attorney's fees. Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ct. App. 1980).

No demand other than the filing of a suit is required under this section; moreover, a new and lesser demand may be made by amendment after suit is filed, and the surety's liability for the statutory penalty will be determined by whether it elects to contest the claim rather than offering to pay the reduced amount or asking for time in which to pay. R.J. “Bob” Jones Excavating Contractor v. Firemen's Ins. Co., 324 Ark. 282, 920 S.W.2d 483 (1996).

There is no requirement that formal demand for payment be made; it is sufficient to show that the insurer was put on notice that payment under the policy was due. Newcourt Fin., Inc. v. Canal Ins. Co., 67 Ark. App. 347, 1 S.W.3d 452 (1999).

Excess Liability Carriers.

This section applies to bar an award of attorneys' fees to an excess liability carrier in the defense of a case where the insurer is found not liable for a loss. Employers Surplus Ins. Co. v. Murphy Oil USA, Inc., 338 Ark. 299, 993 S.W.2d 481 (1999).

Insurer's Liability.

Insurer held liable for statutory penalty and/or attorney's fees. Queen of Arkansas Ins. Co. v. Taylor, 100 Ark. 9, 138 S.W. 990 (1911); New York Life Ins. Co. v. Adams, 151 Ark. 123, 235 S.W. 412 (1921); Home Life & Accident Co. v. Scheuer, 162 Ark. 600, 258 S.W. 648 (1924); Continental Life Ins. Co. v. Gray, 188 Ark. 65, 64 S.W.2d 554 (1933); American Nat'l Ins. Co. v. Westerfield, 189 Ark. 476, 73 S.W.2d 155 (1934); Home Life Ins. Co. v. Ward, 189 Ark. 793, 75 S.W.2d 379 (1934); Morrison-Knudsen Co. v. Phoenix Ins. Co., 172 F.2d 124 (8th Cir. 1949) (preceding decisions under prior law); Lewis v. Goldsborough, 234 F. Supp. 524 (E.D. Ark. 1964); Lawrence v. Providential Life Ins. Co., 238 Ark. 981, 385 S.W.2d 936 (1965); Trinity Universal Ins. Co. v. Stobaugh, 239 Ark. 746, 395 S.W.2d 24 (1965); Whitfield v. Metropolitan Life Ins. Co., 262 F. Supp. 977 (W.D. Ark. 1967); Tri-State Ins. Co. v. Smith, 248 Ark. 71, 449 S.W.2d 698 (1970); Haskins v. Occidental Life Ins. Co., 349 F. Supp. 1192 (E.D. Ark. 1972); Home Ins. Co. v. Crawford, 251 Ark. 843, 475 S.W.2d 889 (1972); Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976); Southern Farm Bureau Cas. Ins. Co. v. Gooding, 263 Ark. 435, 565 S.W.2d 421 (1978); Farmers Mut. Ins. Co. v. Lane, 278 Ark. 53, 643 S.W.2d 544 (1982); Stuckey v. Time Ins. Co., 669 F. Supp. 261 (E.D. Ark. 1987), aff'd without op., 860 F.2d 1084 (8th Cir. Ark. 1988)Limited byHall v. Modern Woodmen of Am., 882 F. Supp. 830 (E.D. Ark. 1994); USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988); Shepherd v. State Auto Property & Cas. Ins. Co., 312 Ark. 502, 850 S.W.2d 324 (1993).

For cases concerning insurer's liability where suicide or murder may be involved, see, Fidelity & Cas. Co. v. Meyer, 106 Ark. 91, 152 S.W. 995 (1912); Guardian Life Ins. Co. v. Dixon, 152 Ark. 597, 240 S.W. 25 (1922) (preceding decisions under prior law); Clark Ctr., Inc. v. National Life & Accident Ins. Co., 245 Ark. 563, 433 S.W.2d 151 (1968); Clark v. New York Life Ins. Co., 245 Ark. 763, 434 S.W.2d 611 (1968); Clark v. Paul Revere Life Ins. Co., 417 F.2d 683 (8th Cir. 1969); Fisk v. Security Life & Trust Co., 575 F.2d 1242 (8th Cir. 1978).

Where the defendant insurance company failed to pay a loss accruing under a parol agreement, the company was not liable for the statutory penalty and attorney's fees. Aetna Ins. Co. v. Short, 124 Ark. 505, 187 S.W. 657 (1916); Carolina Cas. Ins. Co. v. Helms, 248 F.2d 268 (8th Cir. 1957) (preceding decisions under prior law).

There was no liability where the beneficiary sued for more than the face value of the policy which was tendered before and accepted after the suit was brought. Illinois Bankers' Life Ass'n v. Mann, 158 Ark. 425, 250 S.W. 887 (1923) (decision under prior law).

Insurer held not liable for penalty and/or attorney's fees. American Alliance Ins. Co. v. Paul, 173 Ark. 960, 294 S.W. 58 (1927); National Old Line Ins. Co. v. Russell, 188 Ark. 632, 67 S.W.2d 195 (1934); Papan v. Resolute Ins. Co., 219 Ark. 907, 245 S.W.2d 565 (1952); Tollett v. Phoenix Assurance Co., 147 F. Supp. 597 (W.D. Ark. 1956); Equitable Life Assurance Soc'y v. Hughes, 152 F. Supp. 187 (E.D. Ark. 1957); Little Rock Packing Co. v. Massachusetts Bonding & Ins. Co., 262 F.2d 327 (8th Cir. 1959) (preceding decisions under prior law); Callum v. Farmers Union Mut. Ins. Co., 256 Ark. 376, 508 S.W.2d 316 (1974); Hill's Co-op. Gin Co. v. Bullington, 261 Ark. 915, 552 S.W.2d 231 (1977); Farm Bureau Ins. Co. v. Paladino, 264 Ark. 311, 571 S.W.2d 86 (1978); McKee v. Federal Kemper Life Assurance Co., 726 F. Supp. 245 (E.D. Ark. 1989), aff'd, 927 F.2d 326 (8th Cir. Ark. 1991).

Where insurer acted expeditiously and in good faith in ascertaining its liability, the insured was not entitled to recover the statutory penalty and attorney's fees. Missouri State Life Ins. Co. v. King, 186 Ark. 983, 57 S.W.2d 400 (1933); Taylor v. Mutual Life Ins. Co., 193 Ark. 251, 98 S.W.2d 944 (1936) (preceding decisions under prior law); Clark v. New York Life Ins. Co., 245 Ark. 763, 434 S.W.2d 611 (1968). But see, Life & Cas. Ins. Co. v. Wiggins, 224 Ark. 377, 273 S.W.2d 405 (1954); United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955); Willis-Reed Lumber Co. v. New York Underwriters Ins. Co., 146 F. Supp. 74 (W.D. Ark. 1956); Tollett v. Phoenix Assurance Co., 147 F. Supp. 597 (W.D. Ark. 1956) (preceding decisions under prior law).

Insurer shall have a reasonable time to make necessary investigation in reference to the loss and the circumstances thereof after demand. Taylor v. Mutual Life Ins. Co., 193 Ark. 251, 98 S.W.2d 944 (1936); Clark v. New York Life Ins. Co., 245 Ark. 763, 434 S.W.2d 611 (1968) (decision under prior law).

An insured may be entitled to the statutory penalty and attorney's fee even if the insurer has paid the claim to the insured. Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ct. App. 1980).

When an insurer cancels a liability policy for nonpayment of premium and so notifies the insured prior to an accident, the insurer is not liable. State Farm Mut. Auto. Ins. Co. v. Abercrombie, 212 Ark. 855, 208 S.W.2d 170 (1948) (decision under prior law).

This section does not contemplate the awarding of a contingent fee against the insurer. Southern Farm Bureau Life Ins. Co. v. Cowger, 295 Ark. 250, 748 S.W.2d 332 (1988).

Where plaintiffs suffer no loss and do not recover a money judgment, they are not entitled to a 12% penalty under this section. Shelter Mut. Ins. Co. v. Smith, 300 Ark. 348, 779 S.W.2d 149 (1989).

Failure to pay a claim within 60 days of receipt of proof of loss does not result in automatic liability under the penal provisions of this section; an insurer has a reasonable time to investigate a claim, and what is reasonable depends on the facts and circumstances of the case. McKee v. Federal Kemper Life Assurance Co., 726 F. Supp. 245 (E.D. Ark. 1989), aff'd, 927 F.2d 326 (8th Cir. Ark. 1991).

Where an insured loss occurs and an insurance company fails to pay the loss within the time specified in the policy, then the insurance company is required to pay, in addition to the loss, a 12% penalty plus reasonable attorneys' fees; the fact that the insurance company later pays the claim does not defeat the award of penalty and attorney's fees for it is well settled that attorney's fees and penalty attach if the insured is required to file suit, even though judgment is confessed before trial. Silvey Cos. v. Riley, 318 Ark. 788, 888 S.W.2d 636 (1994).

Where insurer had full knowledge of the family dispute and set a deadline for the parties to resolve their differences, and where the insurer failed to take any action until after the deadline had passed, after the expiration of the sixty-day limit of § 23-81-113(b), and after one of the claimant's filed suit, insurer was liable for the penalties prescribed by subsection (a) of this section. Minnesota Mut. Life Ins. Co. v. Looney, 55 Ark. App. 384, 935 S.W.2d 3 (1996).

Under-insured motorist insurance carrier was liable to its policy holder for attorney fees under this section because the amount recovered was within twenty percent of the $75,000 demanded in the amended complaint; because the policy holder amended his complaint, he was not tied to the $100,000 demand in the original complaint. Southern Farm Bureau Cas. Ins. Co. v. Brinker, 350 Ark. 15, 84 S.W.3d 846 (2002).

Pursuant to subdivision (a)(1) of this section, an insurer's filing of an interpleader complaint was unreasonable where none of the named defendants had any claim to the proceeds of the insurance policy that the insureds had filed a claim for, based on a fire that destroyed their home and personal property; a second mortgage was immaterial where the terms of the policy between the insureds and the insurer did not name the second mortgagee as a loss payee. Farm Bureau Mut. Ins. Co. of Ark., Inc. v. Guyer, 2011 Ark. App. 710, 386 S.W.3d 682 (2011).

Pursuant to subdivision (a)(1) of this section, an insurer's filing of an interpleader complaint was unreasonable where none of the named defendants had any claim to the proceeds of the insurance policy that the insureds had filed a claim for, based on a fire that destroyed their home and personal property; judgment creditors' liens did not apply to the insurance proceeds. Farm Bureau Mut. Ins. Co. of Ark., Inc. v. Guyer, 2011 Ark. App. 710, 386 S.W.3d 682 (2011).

Insurer's Rights.

The insurer held to have a right to demand proof of a fire loss without becoming liable to the statutory penalty and attorney's fee. North British & Mercantile Ins. Co. v. Equitable Bldg. & Loan Ass'n, 185 Ark. 476, 47 S.W.2d 797 (1932) (decision under prior law).

Given that this section allows attorney's fees to insureds under prescribed circumstances, but omits any reference to such fee awards to insurers, the statute does not allow an award of attorney's fees to an insurer who prevails in an action by an insured seeking recovery for a claim under a policy. Village Mkt., Inc. v. State Farm Gen. Ins. Co., 334 Ark. 227, 975 S.W.2d 86 (1998).

Interest.

The statutory penalty is assessed in addition to interest. Maryland Cas. Co. v. Maloney, 119 Ark. 434, 178 S.W. 387 (1915) (decision under prior law).

There is no conflict in the awarding of pre-judgment interest pursuant to § 23-81-118 and, in addition, awarding a statutory penalty and attorney's fees pursuant to this section. USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988).

Prejudgment interest is based upon an improperly disallowed insurance claim. Where the trial court's decision to award the proceeds of the policy to the estate is reversed, the estate's argument for a statutory penalty and prejudgment interest has no basis. First Pyramid Life Ins. Co. of Am. v. Stoltz, 311 Ark. 313, 843 S.W.2d 842 (1992), rehearing denied, First Pyramid Life Ins. Co. v. Stoltz, 312 Ark. 95, 843 S.W.2d 842 (1992), cert. denied, 510 U.S. 908, 114 S. Ct. 290 (1993).

Jurisdiction.

The penalty and attorney's fee provided for is collectible in chancery court as well as in any other court. Bankers' Reserve Life Co. v. Crowley, 171 Ark. 135, 284 S.W. 4 (1926) (decision under prior law).

A justice of the peace has jurisdiction to recover on insurance policy and in addition thereto the statutory penalty and attorney's fee. American Liberty Mut. Ins. Co. v. Washington, 183 Ark. 497, 36 S.W.2d 963 (1931) (decision under prior law).

Penalty and attorney's fees included in amount in controversy for jurisdictional purposes. Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 54 S. Ct. 133, 78 L. Ed. 267 (1933); Pacific Mut. Life Ins. Co. v. Bierman, 188 Ark. 703, 67 S.W.2d 577 (1934); American United Life Ins. Co. v. Franklin, 97 F.2d 76 (8th Cir. 1938) (preceding decisions under prior law); State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F. Supp. 784 (E.D. Ark.), aff'd, 324 F.2d 340 (8th Cir. 1963); Wortman v. Safeco Ins. Co. of Am., 227 F. Supp. 468 (E.D. Ark. 1963); Peacock & Peacock, Inc. v. Stuyvesant Ins. Co., 332 F.2d 499 (8th Cir. 1964); Combined Ins. Co. of Am. v. Dreyfus, 244 Ark. 1011, 428 S.W.2d 239 (1968).

The penalty and reasonable attorney's fees under this section do not come within the purview of the “interest and costs” exclusion referred to in the federal diversity statute. Halter v. National Farmers Union Property & Cas. Co., 502 F. Supp. 736 (E.D. Ark. 1980).

Statutory penalty and attorney's fee have been allowed in only those cases having a connection with the State of Arkansas. USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988).

Liability.

Surety was not liable to subcontractor on complaint for nonpayment under a statutory payment bond because of litigation between subcontractor and general contractor. R.J. “Bob” Jones Excavating Contractor v. Firemen's Ins. Co., 324 Ark. 282, 920 S.W.2d 483 (1996).

There was sufficient connection between the indemnity dispute and the State of Arkansas to support the application of subdivision (a)(1) of this section as to attorney's fees and penalties because defendant insurer's insurance policy matured in Arkansas, the injury to plaintiff farmers' crop caused by the insured manufacturer's product occurred in Arkansas, the damaged property was owned by Arkansas farmers, and the farmers brought suit and obtained a judgment in Arkansas against the manufacturer. Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786 (8th Cir. 2005).

Loss-Payees.

The statute does not limit recovery of penalties and fees to just the holder of an insurance policy, but also permits recovery by a loss-payee under the policy. Newcourt Fin., Inc. v. Canal Ins. Co., 341 Ark. 181, 15 S.W.3d 328 (2000).

Parties Protected.

Beneficiaries, as well as an assignee holding a life policy as collateral, were holders of the policy within the meaning of former section. Huddleston v. Home Life Ins. Co., 182 Ark. 1036, 34 S.W.2d 221 (1931) (decision under prior law).

The person having exercised his right to sue, although not the insured, is the “holder” under the section to whom a surety must pay penalties and attorney fees for failure to pay when legally liable. United States ex rel. Magnolia Petro. Co. v. H.R. Henderson & Co., 126 F. Supp. 626 (W.D. Ark. 1955) (decision under prior law).

Where bank took out additional fire insurance on home of insureds, the additional insurance inured to the benefit of insureds upon payment of the bank loan, and, after destruction of the insured property by fire, insureds were entitled to recover the face amount of the policy issued to the bank, less the unpaid premium instalment plus penalty and a reasonable attorney's fee. Mann v. Charter Oak Fire Ins. Co., 196 F. Supp. 604 (E.D. Ark. 1961), aff'd, 304 F.2d 166 (8th Cir. Ark. 1962).

Where, against insurance company's action for declaratory judgment of nonliability, driver of car which injured a party filed a counterclaim seeking the allowance of a 12 percent penalty and an attorney's fee, the counterclaim was denied, as he paid no part of the injured party's judgment and did not obtain any monetary award in the instant case. State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F. Supp. 784 (E.D. Ark.), aff'd, 324 F.2d 340 (8th Cir. 1963).

Where nephew and uncle lived under same roof and were members of another's household, but there was an absence of evidence showing any particular familial closeness, insurance company was liable under its policy due to provision excluding liability for bodily injury to the insured or any member of the family of the insured residing in the same household as the insured. State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F. Supp. 784 (E.D. Ark.), aff'd, 324 F.2d 340 (8th Cir. 1963).

Excess insurer which defended action was entitled to recover from owner's insurer the legal expenses incurred in defending minor who was held to be an insured under owner's liability policy. Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976).

Argument that the insured should not be entitled to the penalty and fee because the insurer had no obligation to pay the insured any money, as all of it was to go to mortgagee, and that the insured obtained no benefit from the payment and had no interest which should be protected by this section was incorrect and insured was entitled to such penalty and fee. Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ct. App. 1980).

It does not matter whether the actual payment under the policy is made to the insured or to the loss payee in order for the insureds to be entitled to the statutory penalty and attorneys' fees when payment by the insurer is late. Farmers Mut. Ins. Co. v. Lane, 278 Ark. 53, 643 S.W.2d 544 (1982).

Passenger injured in automobile accident could not recover attorneys' fees and expenses from insurer for failure to pay the limits of unisured motorists policy where passager was not entitled to recover under such policy. Williams v. State Farm Mut. Auto. Ins. Co., 737 F.2d 741 (8th Cir. 1984).

A party who prevails under the subrogation statute, § 23-89-101, may, in some circumstances, be entitled to the statutory penalty and attorney's fee under this section. Simmons First Nat'l Bank v. Liberty Mut. Ins. Co., 282 Ark. 194, 667 S.W.2d 648 (1984).

In an action commenced by an insurance company seeking a declaratory judgment that it owed nothing under a motor vehicle policy, the defendant financial institution, which had loaned money to the insured to purchase the vehicle, and which filed a successful counterclaim seeking the policy proceeds, was entitled to recover attorney's fees under the statute. Newcourt Fin., Inc. v. Canal Ins. Co., 67 Ark. App. 347, 1 S.W.3d 452 (1999).

The trial court did not err in its finding that a mortgagee had an interest in insurance proceeds and the penalties enumerated in the statute when, after a fire loss, she received and accepted a quitclaim deed to the property from the mortgagor in full satisfaction of the the mortgagee's underlying debt contained in the parties's real estate contract; the quitclaim deed constituted a release of the mortgagor by the mortgagee from all obligations under the parties' real estate contract and, therefore, the mortgagor conveyed all of her interest in the insurance proceeds and lost her status as an assignee as she had no insurable interest. Bunn v. Luthultz, 70 Ark. App. 26, 13 S.W.3d 915 (2000).

Penalty.

It was not appropriate to remand a class action suit by Arkansas insureds against insurers for underpaying claims to state court because the insurers met the burden of showing the amount in controversy exceeded $5 million, based on, inter alia, the insurers' potential statutory penalties under subsection (d) of this section. Basham v. American Nat'l County Mut. Ins. Co., 979 F. Supp. 2d 883 (W.D. Ark. 2013).

Penalty and Attorney's Fees.

Trial court did not err in granting an insured's motion for attorney fees pursuant to § 23-79-209 because the insured prevailed against the insurer's counterclaim for declaratory judgment attempting to void its obligations to pay underinsured motorist (UIM) coverage, which triggered § 23-79-209, and when the insured prevailed on her claim seeking payments under the UIM provision of her automobile liability policy that implicated this section; the application of either this section or § 23-79-209 does not necessarily preclude the application of the other if both causes of action are at issue. Southern Farm Bureau Cas. Ins. Co. v. Krouse, 2010 Ark. App. 493, 375 S.W.3d 763 (2010).

Insured was not entitled to relief against an insurer under this section or § 23-79-209 because (1) the insured did not allege the insurer breached a contractual duty, and (2) the insured's suit did not arise from a declaratory judgment action or the insurer's effort to cancel or lapse a policy, so the insured suffered no “loss” covered by either statute. Cooper v. Gen. Am. Life Ins. Co., 827 F.3d 729 (8th Cir. 2016).

Insured's claim for statutory 12% penalty damages and attorney's fees against insurers was properly denied because the insured did not recover at least 80% of the amount the insured sought. Simmons Foods, Inc. v. Indus. Risk Insurers, 863 F.3d 792 (8th Cir. 2017).

Receivership.

Where claimants did not sue until receiver was appointed and then voluntarily intervened in receivership proceeding in chancery court, they were not entitled to the penalty and attorney's fees. Federal Union Sur. Co. v. Flemister, 95 Ark. 389, 130 S.W. 574 (1910) (decision under prior law).

Damages and attorney's fee could not be recovered in a case where proof of loss was made after the company was placed in the hands of a receiver. Massachusetts Bonding & Ins. Co. v. Home Life & Accident Co., 119 Ark. 102, 178 S.W. 314 (1915) (decision under prior law).

Recovery on Principal Claim.

For cases decided prior to 1991 amendment holding that insured was not entitled to recover a penalty and attorney's fee where he failed to recover full amount sued for, see Pacific Mut. Life Ins. Co. v. Carter, 92 Ark. 378, 123 S.W. 384 (1909); Fidelity Phenix Fire Ins. Co. v. Roth, 164 Ark. 608, 262 S.W. 643 (1924); Lincoln Reserve Life Ins. Co. v. Jones, 178 Ark. 466, 10 S.W.2d 910 (1928); National Union Fire Ins. Co. v. Bynum, 183 Ark. 1100, 40 S.W.2d 446 (1931); Detroit Fire & Marine Ins. Co. v. Helms, 184 Ark. 308, 42 S.W.2d 394 (1931); Mutual Life Ins. Co. v. Marsh, 186 Ark. 861, 56 S.W.2d 433 (1933); Service Fire Ins. Co. v. Horn, 202 Ark. 300, 150 S.W.2d 53 (1941); Liverpool & London & Globe Ins. Co. v. Jones, 207 Ark. 237, 180 S.W.2d 519 (1944); Good Canning Co. v. London Guarantee & Accident Co., 128 F. Supp. 778 (W.D. Ark. 1955); Southern Farm Bureau Cas. Ins. Co. v. Reed, 231 Ark. 759, 332 S.W.2d 615 (1960) (preceding decisions under prior law); Alexander v. Pilot Fire & Cas. Ins. Co., 331 F. Supp. 561 (E.D. Ark. 1971); Cassady v. United Ins. Co. of Am., 370 F. Supp. 388 (W.D. Ark. 1974); Highlands Ins. Co. v. William Burris Masonry Contractors, Inc., 258 Ark. 694, 528 S.W.2d 405 (1975); MFA Mut. Ins. Co. v. Keller, 274 Ark. 281, 623 S.W.2d 841 (1981); Bank of Mulberry v. Fireman's Fund Ins. Co., 550 F. Supp. 1218 (W.D. Ark. 1982), aff'd, 720 F.2d 501 (8th Cir. 1983); Hill v. Farmers Union Mut. Ins. Co., 15 Ark. App. 222, 691 S.W.2d 196 (1985).

For cases decided prior to the 1991 amendment, holding that insured was entitled to penalty and attorney's fee as having recovered full amount demanded on principal claim, see Queen of Ark. Ins. Co. v. Millham, 102 Ark. 675, 145 S.W. 540 (1912); Queen of Ark. Ins. Co. v. Bramlett, 103 Ark. 1, 145 S.W. 541 (1912) (decision under prior law); Kansas City Fire & Marine Ins. Co. v. Epperson, 234 Ark. 1100, 356 S.W.2d 613 (1962); Smith v. Beall, 248 Ark. 248, 451 S.W.2d 195 (1970); Farm Bureau Mut. Ins. Co. v. Mitchell, 249 Ark. 127, 458 S.W.2d 395 (1970); Alexander v. Pilot Fire & Cas. Ins. Co., 331 F. Supp. 561 (E.D. Ark. 1971); Woods v. Commercial Union Ins. Co. of Am., 336 F. Supp. 494 (W.D. Ark. 1971); USAA Life Ins. Co. v. Boyce, 294 Ark. 575, 745 S.W.2d 136 (1988).

Where the plaintiffs recover the full amount of the policy covering the property insured, they are entitled to the statutory penalty and attorney's fees. Featherston v. Hartford Fire Ins. Co., 146 F. Supp. 535 (W.D. Ark. 1956).

For cases decided prior to the 1991 amendment holding that the insured was not entitled to penalty and attorney's fees because of failure to recover full amount demanded or principal claim, see Kansas City Fire & Marine Ins. Co. v. Baker, 229 Ark. 130, 313 S.W.2d 846 (1958) (decision under prior law); Southern Farm Bureau Cas. Ins. Co. v. Brigance, 234 Ark. 172, 351 S.W.2d 417 (1961); Smith v. United States Fid. & Guar. Co., 239 Ark. 984, 395 S.W.2d 749 (1965); Ford Life Ins. Co. v. Jones, 262 Ark. 881, 563 S.W.2d 399 (1978), overruled in part, Southern Farm Bureau Life Ins. Co. v. Cowger, 295 Ark. 250, 748 S.W.2d 332 (1988); Red Lobster Inns of Am., Inc. v. Lawyers Title Ins. Corp., 492 F. Supp. 933 (E.D. Ark. 1980), aff'd, 656 F.2d 381 (8th Cir. Ark. 1981); Countryside Cas. Co. v. Grant, 269 Ark. 526, 601 S.W.2d 875 (1980); Bank of Mulberry v. Fireman's Fund Ins. Co., 720 F.2d 501 (8th Cir. 1983).

A new and lesser demand may be made by amendment after suit is filed in which event if the insurer offers to pay the reduced amount, or asks for time in which to pay, there can be no recovery of the penalty. But when insurer elects “to go on and contest the claim on other grounds,” and there is a recovery for the amount sued for (or, now, within 20% of the amount demanded or sought in the suit) it becomes liable under this section for the penalty and attorney fee. United States ex rel. Peevy v. Pensacola Constr. Co., 257 F. Supp. 131 (W.D. Ark. 1966).

Where insurer resisted its obligation without wilful wrong so that claimant lost his claim for exemplary damage, he was thereby also precluded from attorney's fees. Cassady v. United Ins. Co. of Am., 370 F. Supp. 388 (W.D. Ark. 1974).

It is within the trial court's discretion to permit amendment of the complaint by plaintiff during trial or amendment of the complaint to conform to the proof, and, if the sum finally sued for is awarded (or, now, within 20% of the sum finally sued for is awarded), attorneys' fees and penalties are proper. Bank of Mulberry v. Fireman's Fund Ins. Co., 550 F. Supp. 1218 (W.D. Ark. 1982), aff'd, 720 F.2d 501 (8th Cir. 1983).

In order for an insured to be entitled to a 12 percent and attorney's fees pursuant to this section, the plaintiff must recover the exact amount claimed. Security Ins. Corp. v. Henley, 19 Ark. App. 299, 720 S.W.2d 328 (1986) (decision prior to 1991 amendment).

—Reduction of Claim.

Where plaintiff suffered a loss by fire and agreed with the adjuster of the company in which he held a policy as to the amount of damage sustained, but later the company denied all liability, and thereafter plaintiff recovered judgment for the amount, he was entitled to attorney's fees and the statutory penalty although he originally sued for a greater amount. Great Southern Fire Ins. Co. v. Burns & Billington, 118 Ark. 22, 175 S.W. 1161 (1915) (decision under prior law).

Where insured amends his complaint to reduce amount claimed and insurer continues to deny liability, or fails to confess judgment for the lesser amount, statutory penalty and attorney's fees may be asssessed against insurer. Life & Cas. Co. v. Sanders, 173 Ark. 362, 292 S.W. 657 (1927); Pacific Mut. Life Ins. Co. v. McCombs, 188 Ark. 52, 64 S.W.2d 333 (1933), cert. denied, Pacific Mut. L. Ins. Co. v. McCombs, 292 U.S. 624, 54 S. Ct. 628 (1934); Progressive Life Ins. Co. v. Hulbert, 196 Ark. 352, 118 S.W.2d 268 (1938); Kansas City Fire & Marine Ins. Co. v. Kellum, 221 Ark. 487, 254 S.W.2d 50 (1953); Farmers Union Mut. Ins. Co. v. Myers, 234 Ark. 1061, 356 S.W.2d 423 (1962); Old Am. Life Ins. Co. v. McKenzie, 240 Ark. 984, 403 S.W.2d 94 (1966) (preceding decisions under prior law).

An insurance company is not liable for the statutory penalty and attorney's fees where the insured, after claiming a certain amount, sued for a smaller amount (now, an amount not within 20% of the amount demanded or sued for) which the insurance company promptly paid. National Fire Ins. Co. v. Kight, 185 Ark. 386, 47 S.W.2d 576 (1932) (decision under prior law).

Where the insured sues for an amount less than previously demanded, when the suit itself constitutes the original demand, or when he amends his complaint to sue for a lesser amount, and the insurance company confesses liability for the amount sued for (now, an amount not within 20% of the amount demanded or sued for), then the insured is not entitled to the allowance of a penalty or to an attorney's fee. Tollett v. Phoenix Assurance Co., 147 F. Supp. 597 (W.D. Ark. 1956) (decision under prior law); Armco Steel Corp. v. Ford Constr. Co., 237 Ark. 272, 372 S.W.2d 630 (1963).

The plaintiffs recovered within 20 percent of the money demanded, notwithstanding that they sought their policy limits and that the judgment recovered by them was set off by monies paid to two banks for a mortgage and a lien on a vehicle. Farm Bureau Mut. Ins. Co. v. Foote, 341 Ark. 105, 14 S.W.3d 512 (2000).

—Untimely Payment of Claim.

Where it was not reasonably necessary for the insurance company to continue to investigate the case for more than 60 days after the proof of loss was submitted, the time limit in the policy, the trial court properly awarded interest and attorney's fees to the insured after the insurer failed to timely pay the claim. Silvey Cos. v. Riley, 318 Ark. 788, 888 S.W.2d 636 (1994).

State's Authority.

Former section was not an arbitrary and unjust classification of insurance companies but is a valid exercise of the state's police power. Arkansas Ins. Co. v. McManus, 86 Ark. 115, 110 S.W. 797 (1908) (decision under prior law).

Tort Actions.

In a suit against an insurance carrier to recover damages in excess of the policy limits, with such action sounding in tort and not ex contractu, the plaintiff was not entitled to the 12% penalty, reasonable attorney's fee, or interest from the date of the original judgment. Tri-State Ins. Co. v. Busby, 251 Ark. 568, 473 S.W.2d 893 (1971).

Neither the Trade Practices Act (§ 23-66-201 et seq.), nor the penalty and fees provisions of this section preempt the area upon which the tort of bad faith is founded. Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984).

The tort of bad faith against an insurance company has not been preempted by this section and by the comprehensive statutory scheme for regulation of the insurance business. Employers Equitable Life Ins. Co. v. Williams, 282 Ark. 29, 665 S.W.2d 873 (1984).

Cited: State Farm Mut. Auto. Ins. Co. v. Pennington, 324 F.2d 340 (8th Cir. 1963); Millers Mut. Fire Ins. Co. v. Russell, 246 Ark. 1295, 443 S.W.2d 536 (1969); Bryan v. Aetna Cas. & Sur. Co., 381 F.2d 872 (8th Cir. 1967); Phillips ex rel. Phillips v. Midwest Mut. Ins. Co., 329 F. Supp. 853 (W.D. Ark. 1971); Howard v. Grain Dealers Mut. Ins. Co., 342 F. Supp. 1125 (W.D. Ark. 1972); Southwestern Ins. Co. v. Camp, 253 Ark. 886, 489 S.W.2d 498 (1973); Vern Barnett Constr. Co. v. J.A. Hadley Constr. Co., 254 Ark. 866, 496 S.W.2d 446 (1973); Thomas v. Williford, 259 Ark. 354, 534 S.W.2d 2 (1976); Grady-Gould Watershed Improv. Dist. v. Transamerica Ins. Co., 570 F.2d 720 (8th Cir. 1978); Robinson v. MFA Mut. Ins. Co., 629 F.2d 497 (8th Cir. 1980); Old American Ins. Co. v. Williamson, 268 Ark. 907, 597 S.W.2d 118 (Ct. App. 1980); Jackson v. Prudential Ins. Co. of Am., 564 F. Supp. 229 (W.D. Ark. 1983); Atlas Carriers, Inc. v. Transport Ins. Co., 584 F. Supp. 50 (E.D. Ark. 1983); Bullock v. State Farm Mut. Auto. Ins. Co., 733 F.2d 63 (8th Cir. 1984); Kay v. Economy Fire & Cas. Co., 284 Ark. 11, 678 S.W.2d 365 (1984); Farmers Ins. Co. v. Shuffield, 284 Ark. 158, 680 S.W.2d 96 (1984); Bell v. Kansas City Fire & Marine Ins. Co., 616 F. Supp. 1305 (W.D. Ark. 1985); Metropolitan Property & Liab. Ins. Co. v. Stancel, 16 Ark. App. 91, 697 S.W.2d 923 (1985); Glenn v. Farmers & Merchants Ins. Co., 649 F. Supp. 1447 (W.D. Ark. 1986); D'Onofrio v. Travelers Ins. Co., 662 F. Supp. 872 (E.D. Ark. 1987); Woolsey v. Nationwide Ins. Co., 697 F. Supp. 1053 (W.D. Ark. 1988); Northwestern Nat'l Life Ins. Co. v. Heslip, 302 Ark. 310, 790 S.W.2d 152 (1990); Mid-Century Ins. Co. v. Anderson, 303 Ark. 54, 791 S.W.2d 706 (1990); Ferrell v. Columbia Mut. Ins. Cas. Co., 306 Ark. 533, 816 S.W.2d 593 (1991); State Farm Mut. Auto. Ins. Co. v. Thomas, 312 Ark. 429, 850 S.W.2d 4 (1993); Mountain Home Sch. Dist. No. 9 v. T.M.J. Builders, Inc., 313 Ark. 661, 858 S.W.2d 74 (1993); State Farm Mut. Auto. Ins. Co. v. Brown, 48 Ark. App. 136, 892 S.W.2d 519 (1995); Shelter Mut. Ins. Co. v. Kennedy, 347 Ark. 184, 60 S.W.3d 458 (2001); Capital Life & Accident Ins. Co. v. Phelps, 76 Ark. App. 428, 66 S.W.3d 678 (2002)State Auto Prop. Cas. Ins. Co. v. Ark. Dep't of Envtl. Quality, 370 Ark. 251, 258 S.W.3d 736 (2007); Southern Farm Bureau Cas. Ins. Co. v. Watkins, 2011 Ark. App. 388, 386 S.W.3d 6 (2011); Farm Bureau Mut. Ins. Co. of Ark. v. VJM Enters., LLC, 2017 Ark. App. 28, 511 S.W.3d 349 (2017).