Ark. Code Ann. § 23-79-209 (2026)

Research References

Ark. L. Notes.

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

Ark. L. Rev.

Mark James Chaney, Recent Developments: Interpreting Arkansas Law, The Eighth Circuit Holds an Award of Attorneys' Fees Shall Be Provided to a Policy Holder Who Partially Prevails Against an Insurer's Action Denying Its Duty to Defend the Holder, 66 Ark. L. Rev. 1145 (2013).

U. Ark. Little Rock L.J.

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

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

Case Notes

Construction.

This section is penal in nature and is to be construed strictly. State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F. Supp. 784 (E.D. Ark.), aff'd, 324 F.2d 340 (8th Cir. 1963).

Purpose.

The intent of this section was to amend prior law by providing an attorney's fee when the insured prevails in a controversy with his insurance company, but does not actually obtain a money judgment against it; therefore where insured brought suit to recover proceeds on an insurance policy and recovered a money judgment this section did not apply and insured could not be awarded attorney's fees. DeFranco v. Valley Forge Ins. Co., 754 F.2d 293 (8th Cir. 1985).

Applicability.

Former section did not apply to suits for the recovery of premiums paid upon a policy wrongfully cancelled. American Republic Life Ins. Co. v. Claybough, 227 Ark. 946, 302 S.W.2d 545 (1957) (decision under prior law).

This section specifically applies to declaratory judgment actions, and excludes the allowance of a penalty, although providing for an award of attorney's fees. 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 applies only in suits to terminate, modify, or reinstate a policy. State Farm Mut. Auto. Ins. Co. v. Brown, 48 Ark. App. 136, 892 S.W.2d 519 (1995).

Insured was not entitled to relief against an insurer under § 23-79-208 or this section 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).

Allowance.

Insureds held entitled to recover in the declaratory action a reasonable fee for the services of their attorneys. Broyles v. Commercial Union Ins. Co., 287 F. Supp. 942 (W.D. Ark. 1968).

Where insurance company brought suit for declaratory judgment seeking to deprive defendant of the benefits of insurance policy issued to defendant's decedent, defendant was entitled to a reasonable attorney's fee and costs of the defense of the action. Eagle Star Ins. Co. v. Deal, 337 F. Supp. 1264 (W.D. Ark. 1972), rev'd, 474 F.2d 1216 (8th Cir. 1973).

Language of this section does not encompass recovery of attorney's fees by principal who prevailed in action by surety to recover amount of claim. Fireman's Fund Ins. Co. v. Clark, 253 Ark. 1025, 490 S.W.2d 447 (1973).

Attorney's fees are not allowed as part of damages where plaintiff fails to recover in his suit the entire amount sued for. Cassady v. United Ins. Co. of Am., 370 F. Supp. 388 (W.D. Ark. 1974).

Mayor charged with having deprived political opponents of their civil rights by making allegedly false and discriminatory statements was awarded attorney fees under this section, where his insurer unsuccessfully appealed a lower court decision ordering it to defend mayor under personal injury policy covering actions for libel or slander, despite insurer's contention that the civil rights action fell outside the scope of a libel or slander suit. Ritter v. United States Fid. & Guar. Co., 573 F.2d 539 (8th Cir. 1978).

In a declaratory judgment action, the awarding of attorney fees is proper only under this section, which does not provide for the 12% penalty set forth in § 23-79-208. Therefore, the trial judge does not err in refusing to assess the 12% penalty. Shelter Mut. Ins. Co. v. Smith, 300 Ark. 348, 779 S.W.2d 149 (1989).

Amount.

Where plaintiff is entitled to recover a reasonable attorney's fee, but there is no testimony as to the amount of such fee, the court may fix the fee upon the record before it. Curran v. Security Ins. Co., 195 F. Supp. 562 (W.D. Ark.), appeal dismissed, 296 F.2d 733 (8th Cir. Ark. 1961).

The right to fix the fee granted by this section is either in the trial court or the appellate court, and, therefore, where insured successfully brought suit asking among other things to be allowed an attorney fee and the trial court erroneously denied this prayer, the appellate court would set the fee for services in trial and appellate courts. Maryland Cas. Co. v. Turner, 235 Ark. 718, 361 S.W.2d 646 (1962).

The determination of the amount of reasonable attorney's fees depends largely upon the circumstances of the particular case. Eagle Star Ins. Co. v. Deal, 337 F. Supp. 1264 (W.D. Ark. 1972), rev'd, 474 F.2d 1216 (8th Cir. 1973).

Attorney's Fees.

Trial court did not err in granting an insured's motion for attorney fees pursuant to this section 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 this section, and when the insured prevailed on her claim seeking payments under the UIM provision of her automobile liability policy that implicated § 23-79-208; the application of either § 23-79-208 or this section 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).

Trial court did not abuse its discretion in granting an insured's motion for attorney fees pursuant to this section and in awarding her $22,162 because the trial court considered all the appropriate factors, and the insured's request was substantiated with billing documents and affidavits of other practicing attorneys; the trial court weighed the value of services rendered in light of the fee request, which discounted the hourly rate and removed thousands of dollars in fees. It found that inaccuracies in the time records would not significantly alter the overall finding of reasonableness. Southern Farm Bureau Cas. Ins. Co. v. Krouse, 2010 Ark. App. 493, 375 S.W.3d 763 (2010).

Trial court did not err in granting an insured's motion for attorney fees pursuant to this section because it could not be reasonably argued that the insurer was not a liability insurance company, inasmuch as it issued the insured's automobile liability insurance policy, and it was the underinsured motorist section of the liability insurance policy that the insurer placed in issue by its counterclaim for a declaratory judgment; casualty insurance is part and parcel of liability insurance, and it is required to be offered to the insured as part of its liability insurance. Southern Farm Bureau Cas. Ins. Co. v. Krouse, 2010 Ark. App. 493, 375 S.W.3d 763 (2010).

Counterclaim for Policy Proceeds.

Section 23-79-208, rather than this section, 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).

Declaratory Judgment.

In a declaratory judgment action, the awarding of attorney's fees is proper under this section, which does not provide for the 12% penalty set forth in § 23-79-208. 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).

Where an insurance company sought a declaratory judgment regarding coverage under a motor vehicle policy and the jury declared that the facts did not support an allegation of arson and that coverage existed under the insurance policy, attorney fees were properly awarded under the statute. Newcourt Fin., Inc. v. Canal Ins. Co., 341 Ark. 181, 15 S.W.3d 328 (2000).

Where an insurance policy excluded coverage for underground damage to a gas well and the underlying action against insured alleged both underground and surface damage, insured was not entitled to attorney fees for defending insurer's declaratory judgment action since insured provided no evidence of surface damage within the policy's coverage, even though the mere allegation of surface damage triggered insured's duty to defend in the underlying action. Bituminous Cas. Corp. v. Zadeck Energy Group, Inc., 416 F. Supp. 2d 654 (W.D. Ark. 2005).

Statute required an insurer to pay an insured attorneys' fees for defending the insurer's declaratory judgment action because, inter alia, by declaring the insurer was, in fact, obligated to defend the insured in three suits, the district court rendered judgment against the insurer. Hortica-Florists' Mut. Ins. Co. v. Pittman Nursery Corp., 729 F.3d 846 (8th Cir. 2013).

Dismissal with Prejudice.

Dismissal of declaratory judgment action with prejudice constituted a final adjudication on the merits adverse to insurance company and entitled insured to award of attorneys fees under this section. Hicks v. Allstate Ins. Co., 304 Ark. 101, 799 S.W.2d 809 (1990).

Holder of Policy.

Although a party is an insured under a policy and entitled to policy protection, his claim for penalty and attorney's fee will be denied where he is not the holder of the policy. 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 judgment adverse to insurer was entered in action brought by insurer against insured subcontractor, and others, only the subcontractor as the named insured and as holder of the policy was entitled to recover attorney fees. Home Ins. Co. v. Arkansas Mechanical Contractors, 531 F.2d 906 (8th Cir. 1976).

The statute allows attorney fees to be awarded only to the holder of an insurance policy and not to the loss-payee under the policy. Newcourt Fin., Inc. v. Canal Ins. Co., 341 Ark. 181, 15 S.W.3d 328 (2000).

Penalty.

Nothing in this section would prevent the allowance of the penalty provided in § 23-79-208 upon a counterclaim for a loss. Home Ins. Co. v. Crawford, 251 Ark. 843, 475 S.W.2d 889 (1972).

Reasonable Fees.

Attorney's fee held not unreasonable. Aetna Cas. & Sur. Co. v. Stover, 327 F.2d 288 (8th Cir. 1964).

Considering, from the record, the nature of the cause, novelty of questions presented, heat of the contest, time necessary for preparation, standing and ability of attorneys on both sides, and the knowledge of the trial court of the nature and extent of services rendered, attorney fee held not excessive. Old Republic Ins. Co. v. Alexander, 245 Ark. 1029, 436 S.W.2d 829 (1969).

Cited: State Farm Mut. Auto. Ins. Co. v. Pennington, 324 F.2d 340 (8th Cir. 1963); Smith v. Beall, 248 Ark. 248, 451 S.W.2d 195 (1970); Southern Farm Bureau Cas. Ins. Co. v. Gooding, 263 Ark. 435, 565 S.W.2d 421 (1978); Farmers Ins. Co. v. Shuffield, 284 Ark. 158, 680 S.W.2d 96 (1984); Medical Liab. Mut. Ins. Co. v. Alan Curtis Enters., 373 Ark. 525, 285 S.W.3d 233 (2008).