Ark. Code Ann. § 23-79-210 (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.

Ark. L. Notes.

Sampson, Nonprofit Risk; Nonprofit Insurance, 2008 Ark. L. Notes 83.

Ark. L. Rev.

State Immunity and the Arkansas Claims Commission, 21 Ark. L. Rev. 180.

Direct Tort Liability of Insurance Carriers, 22 Ark. L. Rev. 167.

Conflict of Laws — Constitutional Law — Quasi in Rem Jurisdiction Based on Attachment of Out-of-State Defendant's Liability Insurance Policy, 23 Ark. L. Rev. 646.

Hall v. University of Nevada: Sovereign Immunity and the Transitory Action, 27 Ark. L. Rev. 546.

Leflar, Conflict of Laws: Arkansas, 1983-1987, 41 Ark. L. Rev. 63.

Recent Developments: Charitable-Immunity Doctrine — Direct-Action Statute, 59 Ark. L. Rev. 199.

U. Ark. Little Rock L.J.

Survey — Insurance, 10 U. Ark. Little Rock L.J. 217.

Survey, Civil Procedure, 14 U. Ark. Little Rock L.J. 285.

U. Ark. Little Rock L. Rev.

Annual Survey of Caselaw, Tort Law, 25 U. Ark. Little Rock L. Rev. 1041.

Annual Survey of Case Law: Tort Law, 29 U. Ark. Little Rock L. Rev. 971.

Case Notes

In General.

This section gives the injured parties in cases where defendants are not liable in tort or contract a direct cause of action against any insurance company that has issued a liability policy applying to the situation. Helton v. Sisters of Mercy of St. Joseph's Hosp., 234 Ark. 76, 351 S.W.2d 129 (1961).

This section does not require that the nonprofit corporation itself be the named insured under the policy; this section only mandates that the coverage be carried by the nonprofit corporation. Rogers v. Tudor Ins. Co., 325 Ark. 226, 925 S.W.2d 395 (1996).

Construction.

Direct action statutes are remedial in nature and are liberally construed for the benefit of injured parties and to effectuate the intended purposes. Rogers v. Tudor Ins. Co., 325 Ark. 226, 925 S.W.2d 395 (1996).

The General Assembly, in enacting this section, did not equate a corporation “carrying” liability insurance on its officers and directors with “covering” the corporation itself; to interpret this section that way would be too narrow an interpretation. Rogers v. Tudor Ins. Co., 325 Ark. 226, 925 S.W.2d 395 (1996).

Purpose.

The purpose of former section was to apply only to insurance companies issuing policies to enumerated immune organizations. The purpose was clear and that purpose would not be served by extending the statute to allow a direct action against the insurer of an individual. Savage v. Spicer, 235 Ark. 946, 362 S.W.2d 668 (1962) (decision under prior law).

Applicability.

This section applies in action against insurer of Oklahoma municipality for damages sustained by Arkansas resident when his vehicle was struck by truck of municipality on highway in Arkansas as insurance company agreed in policy to be amenable to such law where municipality was engaged in activities relating to its policy coverage. Bradshaw v. St. Paul Fire & Marine Ins. Co., 587 F. Supp. 506 (W.D. Ark. 1984).

This section, also known as the direct action statute, only allows suits against insurers for the negligence of their insureds when the insurer is a charitable organization or governmental entity. Jarboe v. Shelter Ins. Co., 317 Ark. 395, 877 S.W.2d 930 (1994); National Bank of Commerce v. Quirk, 323 Ark. 769, 918 S.W.2d 138 (1996), overruled in part, Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006).

Dismissal of malpractice insurance carrier for individual defendant doctors was appropriate where plaintiffs, in their complaint, did not allege insurer was brought in as the insurer for medical center, or that the medical center was negligent. National Bank of Commerce v. Quirk, 323 Ark. 769, 918 S.W.2d 138 (1996), overruled in part, Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006).

Under this section, the following elements must exist for it to apply: (1) liability insurance must be carried by a nonprofit corporation; (2) a person must suffer injury or damage on account of negligence or wrongful conduct; and (3) the damage or injury must be on account of the negligence or wrongful conduct of “servants, agents, or employees” of the nonprofit corporation acting within the scope of their agency or employment. Rogers v. Tudor Ins. Co., 325 Ark. 226, 925 S.W.2d 395 (1996).

Parents of child patient who died after receiving emergency treatment brought direct action against insurer of non-profit hospital, as permitted by this section. Kenning v. St. Paul Fire & Marine Ins. Co., 990 F. Supp. 1104 (W.D. Ark. 1997).

Bad Faith.

The elements for a claim for bad faith were properly pled: affirmative misconduct by the insurance company, in bad faith, and malicious or oppressive attempt to avoid liability under the policy. Bethel Baptist Church v. Church Mut. Ins. Co., 54 Ark. App. 262, 924 S.W.2d 494 (1996).

Bankruptcy.

Section 23-89-102 provides that an insurer's liability is not affected by the insured's insolvency; the filing of a petition in bankruptcy is not the type of immunity contemplated by this section. Jarboe v. Shelter Ins. Co., 317 Ark. 395, 877 S.W.2d 930 (1994).

Damages.

In a direct action that was brought against a liability insurer after a surgeon operated on the wrong side of the patient's brain, the circuit court did not err in reducing the jury's verdict from $20 million to $11 million. Subdivision (a)(3) of this section limited liability to the extent of coverage in the policy. ProAssurance Indem. Co. v. Metheny, 2012 Ark. 461, 425 S.W.3d 689 (2012).

Direct Actions.

Where a party injured in an automobile accident sought a judgment declaring insurance coverage of the tortfeasor, the action was not a direct action against the insurance company, and the circuit court was not prohibited from hearing the complaint by this section or § 23-89-101. National Sec. Fire & Cas. Co. v. Poskey, 309 Ark. 206, 828 S.W.2d 836 (1992).

The direct action statute does not allow injured parties to sue their nonimmune tortfeasors' insurance carriers directly until the injured party has obtained a judgment against the tortfeasor, and the judgment remains uncollected after 30 days. National Sec. Fire & Cas. Co. v. Poskey, 309 Ark. 206, 828 S.W.2d 836 (1992).

In claimant's negligence action, summary judgment in favor of a hospital and health system was proper as the charitable-immunity doctrine barred recovery against the hospital, a charitable facility, the health system's pooled comprehensive liability program did not meet the statutory definition of insurance, and the health system did not meet the statutory definition of an insurer under the Arkansas Insurance Code. Sowders v. St. Joseph's Mercy Health Ctr., 368 Ark. 466, 247 S.W.3d 514 (2007).

This section was remedial in nature and 2007 Ark. Acts 3963 (Act 750) did not create a new cause of action as the direct-action statute was a statutory remedy because it provided a new or substitute remedy for the underlying claim of negligence in cases where the plaintiff could not recover directly from a negligent charitable hospital; the amendment did not create a new legal right for injured parties, and Act 750 did not disturb any of the pooled-liability fund's vested rights. Archer v. Sisters of Mercy Health Sys., 375 Ark. 523, 294 S.W.3d 414 (2009).

Ark. R. Civ. P. 15(c) did not apply and the estate administrator's claims were barred by the statute of limitations, because the administrator's error in failing to name the insurer in the original complaint was purely due to a misunderstanding of this section, the direct-action statute, and not because she did not have the identity of the insurance company. Glass v. Saline County Med. Ctr., 2012 Ark. App. 525, 423 S.W.3d 618 (2012).

Employees of Organizations.

Employee of county library who was injured while distributing and collecting books transported by bookmobile properly filed direct action against liability insurer claiming that her injuries had been caused by the negligence of the library in permitting an unsafe vehicle (bookmobile) to be operated on the highways and in permitting it to be driven by an incompetent driver. Aetna Cas. & Sur. Co. v. Brashears, 226 Ark. 1017, 297 S.W.2d 662 (1956) (decision under prior law).

Clause in insurance policy excluding employees of charitable organization from coverage under this section was permissible. Ramsey v. American Auto. Ins. Co., 234 Ark. 1031, 356 S.W.2d 236 (1962).

The fact that defendant school bus driver might be personally responsible for injuries resulting from his negligence was in no way a defense for the school district's insurer, if the driver was acting within the scope of his employment and his negligence was the proximate caue of the injuries and damages alleged to have been suffered by plaintiffs. Hagen v. Payne, 222 F. Supp. 548 (W.D. Ark. 1963).

Although defendants are immune from tort liability as state employees, it is a qualified immunity, and suit can be maintained against an employee to the extent the employee is protected by insurance. Carter v. Bush, 296 Ark. 261, 753 S.W.2d 534 (1988).

Evidence.

Proof that negligence of insured was proximate cause of damages required. Ferrell v. Southern Farm Bureau Cas. Ins. Co., 291 Ark. 322, 724 S.W.2d 465 (1987).

Where the patient filed a complaint alleging that the doctor and the medical center's nursing staff were negligent in connection with a fall she sustained, the medical center answered and pled that it was a non-profit entity insured by an insurance carrier; the carrier was named an as additional party defendant under this section, the direct-action statute. At trial, the circuit judge did not err by prohibiting the patient from presenting to the jury the fact that the medical center's insurance carrier was a named defendant; this was wholly irrelevant to the issue of the medical center's negligence. Nelson v. Stubblefield, 2009 Ark. 256, 308 S.W.3d 586 (2009).

Immunity from Tort Action.

An insurance company which acted as liability carrier for a sheriff was not liable under this section, since this section does not extend to individuals who may be immune from suit for tort. Hamilton v. Covington, 445 F. Supp. 195 (W.D. Ark. 1978).

Defendant held not to qualify as an “association of any kind or character, not subject to suit for tort” under this section. Lacey v. Bekaert Steel Wire Corp., 619 F. Supp. 1234 (W.D. Ark. 1985), aff'd, 799 F.2d 434 (8th Cir. 1986).

This section does not preempt an action in tort for bad faith misconduct. Sparks v. Shelter Life Ins. Co., 838 F.2d 987 (8th Cir. 1988).

Where state fair booklet and entry forms clearly stated that the fair association would not be responsible for loss or damage to property while it was on the fair grounds and the fair booklet also specifically informed entrants that if they desired to protect their property from fire loss, they should obtain insurance against that risk, a jury could conclude that, taken as a whole, the clauses exempted the fair association from liability for negligently caused fire damage to property. Frensley v. National Fire Ins. Co., 856 F.2d 1199 (8th Cir. 1988).

As nonprofit blood bank did not cause injury to person who died from AIDS as a result of a contaminated blood transfusion through any negligence on its part, the blood bank's insurance company was not liable to the deceased person's wife on its policy of insurance under this section. Kirkendall v. Harbor Ins. Co., 698 F. Supp. 768 (W.D. Ark. 1988), aff'd, 887 F.2d 857 (8th Cir. 1989).

Direct action against carriers is limited to the insurance carriers of cooperative nonprofit organizations, municipalities, agencies, or subdivisions of municipalities or of the state, improvement districts, school districts, or other organization of any kind or character not subject to suit in tort, and this section makes no mention of individuals. Carter v. Bush, 296 Ark. 261, 753 S.W.2d 534 (1988).

Statute was inapplicable where mother's negligence action against insurer of nonprofit corporation failed to allege in the pleadings that the insured was a charitable organization that was immune from suit in tort; courts have never held that charitable organizations were completely immune from suit, rather, they were only immune from execution against their property. Clayborn v. Bankers Std. Ins. Co., 348 Ark. 557, 75 S.W.3d 174 (2002), overruled in part, Low v. Ins. Co. of N. Am., 364 Ark. 427, 220 S.W.3d 670 (2005).

Supreme Court of Arkansas declined to overrule Clayborn , which held that a nonprofit organization could be sued and found liable, but the prevailing party in the lawsuit against the nonprofit could not execute on the property or assets of the nonprofit in order to satisfy any judgment, and the direct action statute only allowed a suit against the nonprofit's insurer if the nonprofit was immune from suit, not just immune for judgment. Scamardo v. Jaggers, 356 Ark. 236, 149 S.W.3d 311 (2004), overruled, Low v. Ins. Co. of N. Am., 364 Ark. 427, 220 S.W.3d 670 (2005).

Where the scope of the charitable-immunity doctrine has undergone subtle, but significant, changes in the past century, culminating in its interpretation of the “not subject to suit for tort” language in this section as being synonymous with a charitable organization's immunity from tort liability, Scamardo v. Jaggers, 356 Ark. 236, 149 S.W.3d 311 (2004), was out of step with precedent and thereby overruled; further, to the extent that Clayborn v. Bankers Standard Ins. Co., 348 Ark. 557, 75 S.W.3d 174 (2002), was inconsistent with the holding in the present case, it too was overruled. Low v. Ins. Co. of N. Am., 364 Ark. 427, 220 S.W.3d 670 (2005).

Trial court erred in denying appellants' motion to strike a medical center's amended answer in an action for medical negligence because the amended answer, in which the center stated for the first time that it was entitled to charitable immunity, was prejudicial to appellants; by the time the center filed its amended answer, any attempt to add the center's insurer as a party-defendant would have been untimely. Neal v. Sparks Reg'l Med. Ctr., 375 Ark. 46, 289 S.W.3d 8 (2008).

Trial court erred in dismissing a patient's malpractice complaint against a hospital's insurer by ruling that this section, the direct-action statute, did not apply because the supreme court had held that immunity from liability in tort constituted immunity from suit under the direct-action statute and that the statute permitted a lawsuit to be filed against the insurer of a charitable organization; the patient pleaded sufficient facts in his original complaint to establish the hospital's immunity because he alleged that the hospital was a nonprofit corporation and also that the hospital was not subject to suit in tort due to the fact that it had received 26 U.S.C.S. § 501(c)(3) designation from the Internal Revenue Service. Presley v. St. Paul Fire & Marine Ins. Co., 2010 Ark. App. 367, 374 S.W.3d 893 (2010).

Private Policies.

An insurer would not be liable under an insurance policy carried by private individuals, as it would not come under former section. Savage v. Spicer, 235 Ark. 946, 362 S.W.2d 668 (1962) (decision under prior law).

This section only permits direct action against insurance carriers issuing policies to enumerated immune organizations; so where the property owner purchased liability insurance pursuant to its municipal financing agreement, but the city was not a named insured under the policy, the direct action claim against the insurer was properly dismissed. Lacey v. Bekaert Steel Wire Corp., 799 F.2d 434 (8th Cir. 1986).

Purchase of Insurance.

Because a port authority is authorized by law to purchase liability insurance under this section, an assertion that an illegal exaction under Ark. Const. Art. 16, § 13 would result from paying the insurance premium is erroneous. Little Rock Port Auth. v. McCain, 296 Ark. 130, 752 S.W.2d 44 (1988).

Construction company was not an insurer for the purposes of administrator's wrongful death action, notwithstanding that it agreed to indemnify the city against damages and obtained insurance to do so. Cherry v. Tanda, Inc., 327 Ark. 600, 940 S.W.2d 457 (1997).

Rights of Parties.

This section can vest no greater substantive right on a third party than that capable of being asserted by the principal obligee. Tri-State Ins. Co. v. United States, 340 F.2d 542 (8th Cir. 1965).

Where plaintiff insurer sought to deposit its policy limits into the court, and defendants, the known claimants of an accident caused by the insured's driver's negligence, asserted counterclaims under this section, alleging the limits included additional sums, under the UIM endorsement's “Coverage” section, “underinsured motor vehicle” included a vehicle with liability coverage provided in the same policy as the UIM endorsement, and the UIM coverage was explicitly additional to any liability coverage, including the insurer's, thus, the claimants could aggregate liability and UIM coverage. Argonaut Great Cent. Ins. Co. v. Casey, 701 F.3d 829 (8th Cir. 2012).

Servants, Agents, or Employees.

The officers and directors of the corporation were fell within the broad category of “servants, agents, or employees” of the nonprofit corporation under this section. Rogers v. Tudor Ins. Co., 325 Ark. 226, 925 S.W.2d 395 (1996).

Statute of Limitations.

While this section allows for a direct action against an insurance company, there is no indication that such an action is not subject to the statute of limitations. Harvill v. Community Methodist Hosp. Ass'n, 302 Ark. 39, 786 S.W.2d 577 (1990).

Where the Boy Scouts of America failed to inform parents and their injured child about the BSA's insurance coverage and parents failed to include insurer in the suit before the statute of limitations ran, notice was imputed to the insurer; thus, under the circumstances, the second amended complaint related back to the filing of the original complaint and was not barred by the statute of limitations. Low v. Ins. Co. of N. Am., 364 Ark. 427, 220 S.W.3d 670 (2005).

Cited: Sams v. Pacific Indem. Co., 170 F. Supp. 909 (W.D. Ark. 1959); Martin v. Aetna Cas. & Sur. Co., 239 Ark. 95, 387 S.W.2d 334 (1965); Swan v. Estate of Monette ex rel. Monette, 265 F. Supp. 362 (W.D. Ark. 1967); Matthews v. Travelers Indem. Ins. Co., 245 Ark. 247, 432 S.W.2d 485 (1968); Gregson v. Great Am. Ins. Co., 248 Ark. 673, 453 S.W.2d 28 (1970); Lassiter v. State Farm Mut. Auto. Ins. Co., 371 F. Supp. 1221 (E.D. Ark. 1974); Carr v. St. Paul Fire & Marine Ins. Co., 384 F. Supp. 821 (W.D. Ark. 1974); Ferrara ex rel. Dagley v. Aetna Cas. & Sur., 436 F. Supp. 929 (W.D. Ark. 1977); White v. Mitchell, 263 Ark. 787, 568 S.W.2d 216 (1978); Myers v. Northwestern Nat'l Ins. Co., 534 F. Supp. 117 (W.D. Ark. 1981); Commercial Union Ins. Co. v. Sanders, 272 Ark. 25, 611 S.W.2d 754 (1981); Shafer v. American Employers' Ins. Co., 535 F. Supp. 1067 (W.D. Ark. 1982); Mandel v. United States, 545 F. Supp. 907 (W.D. Ark. 1982); Bankston v. Pulaski County School Dist., 281 Ark. 476, 665 S.W.2d 859 (1984); Mandel v. United States, 793 F.2d 964 (8th Cir. 1986); Hall v. State Farm Fire & Cas. Co., 813 F.2d 137 (8th Cir. 1987); Kelley v. Wiggins, 291 Ark. 280, 724 S.W.2d 443 (1987); Kirkendall v. Harbor Ins. Co., 887 F.2d 857 (8th Cir. 1989); State Farm Mut. Auto. Ins. Co. v. Pharr, 305 Ark. 459, 808 S.W.2d 769 (1991); Hood ex rel. Hood v. Arkansas Sch. Bd. Ins. Coop., 35 Ark. App. 1, 811 S.W.2d 1 (1991); Waire v. Joseph, 308 Ark. 528, 825 S.W.2d 594 (1992); Primm v. United States Fid. & Guar. Ins. Corp., 324 Ark. 409, 922 S.W.2d 319 (1996); George v. Jefferson Hosp. Ass'n, 337 Ark. 206, 987 S.W.2d 710 (1999); Smith v. Rogers Group, Inc., 348 Ark. 241, 72 S.W.3d 450 (2002); Jacobs v. Gulf Ins. Co., 85 Ark. App. 435, 156 S.W.3d 737 (2004); Downing v. Nursing Ctr., 2010 Ark. 175, 369 S.W.3d 8 (2010); Henry v. Cont'l Cas. Co., 2011 Ark. 224, 381 S.W.3d 802 (2011).