Ark. Code Ann. § 23-89-101 (2026)

Research References

ALR.

Conduct or inaction by insurer constituting waiver of, or creating estoppel to assert, right of subrogation. 125 A.L.R.5th 1.

Am. Jur. 7 Am. Jur. 2d, Auto Ins., §§ 53, 190-204.

U. Ark. Little Rock L.J.

Note, Insurance — Subrogation — A Subrogation Clause in a Health Insurance Policy is Enforceable Even Though the Insured Has Not Been Made Whole. Higginbotham v. Arkansas Blue Cross & Blue Shield, 312 Ark. 199, 849 S.W.2d 464 (1993), 16 U. Ark. Little Rock L.J. 475.

Case Notes

Construction.

The wording “… unsatisfied at the expiration of thirty (30) days from the serving of notice of entry of judgment …,” means 30 days from the entry of final judgment as described by A.R.A.P., Rule 4. Simmons First Nat'l Bank v. Liberty Mut. Ins. Co., 282 Ark. 194, 667 S.W.2d 648 (1984).

Purpose.

The manifest purpose of the direct action statute is to protect the rights of the injured plaintiff and not the rights of the insurance company or the insured. Southern Farm Bureau Cas. Ins. Co. v. Robinson, 236 Ark. 268, 365 S.W.2d 454 (1963) (decision under prior law).

Applicability.

Before this section becomes applicable, the injured person must have recovered a judgment against the insured tortfeasor which remains unsatisfied for thirty days. Jarboe v. Shelter Ins. Co., 317 Ark. 395, 877 S.W.2d 930 (1994).

Conditions Precedent to Recovery.

Before this section is applicable, the injured person must have recovered a judgment against the wrongdoer and such judgment must have remained unsatisfied at the expiration of 30 days from the serving of the notice of entry of judgment upon the attorney for the insured or upon the insured or upon the insurer. Swan v. Estate of Monette ex rel. Monette, 265 F. Supp. 362 (W.D. Ark. 1967), aff'd, 400 F.2d 274 (8th Cir. Ark. 1968).

This section does not require the issuance of a writ of execution and its return nulla bona as a condition precedent to injured party's direct action against the liability insurer. Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976).

Conditions Precedent to Suit.

Where injured person has right to sue insurer conditioned upon unsatisfied judgment against insured, the obtaining of the judgment and the unsuccessful efforts to collect it are conditions precedent to cause of action. Spann v. Commercial Std. Ins. Co., 82 F.2d 593 (8th Cir. 1936) (decision under prior law).

Direct Cause of Action.

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 § 23-79-210 or this section. National Sec. Fire & Cas. Co. v. Poskey, 309 Ark. 206, 828 S.W.2d 836 (1992).

Where plaintiff farmers obtained a judgment against manufacturer for damages to their crop and then sued defendant, the manufacturer's commercial general liability insurer, for indemnity, although this section did not create an additional cause of action for a claimant where the underlying insurance policy was issued and delivered outside Arkansas, the statute did not purport to preclude a claimant from relying upon a right of action created by an express provision in an insurance contract, and the policy provided that a person or organization could sue the insurer to recover on a final judgment against an insured obtained after an actual trial; thus, judgment against the insurer was upheld. Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786 (8th Cir. 2005).

Effect of Judgment.

In the absence of proof that injured party's judgment against the insured was procured by fraud, collusion, or bad faith, the liability insurer was bound by the judgment under res judicata principles in injured party's direct action against the insurer. Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976).

Garnishment.

Garnishment does not lie against a liability insurance corporation after a judgment has been rendered against the insured; but the insured may maintain a direct action against the liability insurance carrier. Wood v. Bennett, 176 F. Supp. 205 (W.D. Ark. 1959) (decision under prior law).

Insured Party.

Where the automobile driven by minor at time of accident had been loaned by the owner to minor's parents, the court's finding that the minor was an insured within the terms and coverage of insurer's liability policy to owner was not clearly erroneous despite owner's testimony that he had expressly restricted the use of the loaned automobile to adults. Blevins v. Commercial Std. Ins. Cos., 544 F.2d 967 (8th Cir. 1976).

Penalty and Attorney's Fees.

A party who prevails under this section may, in some circumstances, be entitled to the statutory penalty and attorney's fee under § 23-79-208. Simmons First Nat'l Bank v. Liberty Mut. Ins. Co., 282 Ark. 194, 667 S.W.2d 648 (1984).

Protected Parties.

Servant held to constitute an insured under the policy since he was driving truck with implied permission of the insured. Traders & Gen. Ins. Co. v. Powell, 177 F.2d 660 (8th Cir. 1949) (decision under prior law).

The defendant insurance company was entitled to a summary judgment in an action for injuries received by the plaintiff-employee where the liability policy excluded coverage of employees of the insured with respect to injuries to other employees injured in the course of such employment. Bryan v. Aetna Cas. & Sur. Co., 381 F.2d 872 (8th Cir. 1967).

Suit by plaintiff insurer as subrogee of insured against primary insurers for their share of settlement was not prevented by this section since the action was not by or to enforce the rights of the injured person. Trinity Universal Ins. Co. v. State Farm Mut. Auto Ins. Co., 246 Ark. 1021, 441 S.W.2d 95 (1969).

A creditor of an injured person who had obtained a judgment against the insured may not maintain an action against the insurer for the unpaid portion of the judgment even if the insurer had negligently or in bad faith refused to settle the claim against the insured for an amount within the limits of the policy. Greer v. Mid-West Nat'l Fire & Cas. Ins. Co., 305 F. Supp. 352 (E.D. Ark. 1969), aff'd, . Co., 434 F.2d 215 (8th Cir. 1970).

Rights of Injured Party.

The rights of the injured person against an insurer under an automobile public liability and property damage policy cannot be destroyed by any actions of the insured and insurer attempting subsequently to cancel, release, or compromise notwithstanding that the third party's right to sue the insurer is conditioned on an unsatisfied judgment against the insured. Spann v. Commercial Std. Ins. Co., 82 F.2d 593 (8th Cir. 1936) (decision under prior law).

Rights of injured person in regard to insurance rise no higher than those of the insured, but there is no obligation to give notice. Maryland Cas. Co. v. Waggoner, 193 Ark. 550, 101 S.W.2d 451 (1937) (decision under prior law).

The judgment creditor of a tort judgment against the holder of a public liability policy cannot, after the payment by the insurer of the face of the policy toward satisfaction of the judgment, sue the insurer for the excess on the ground that the insurer is liable to the policyholder for such excess because of bad faith refusal before the trial to settle the plaintiff's claim within the limits of the policy. Greer v. Mid-West Nat'l Fire & Cas. Ins. Co., 434 F.2d 215 (8th Cir. 1970).

In action against insurers of the owner of the vehicle involved in a rear-end collision, the injured person stands in the shoes of the insured regarding the defense of failing to cooperate. Southern Farm Bureau Cas. Ins. Co. v. Jackson, 262 Ark. 152, 555 S.W.2d 4 (1977).

Venue.

This section is a subrogation statute and the action permitted by it is contractual in nature and not for personal injury; thus, venue is determined not by § 16-60-112 but by § 16-60-116 or § 23-79-204. Equity Fire & Cas. Ins. Co. v. Coleman, 326 Ark. 100, 928 S.W.2d 796 (1996).

Cited: Aufderhar v. American Employers Ins. Co., 331 F.2d 681 (8th Cir. 1964); Great Am. Ins. Co. v. Ratliff, 242 F. Supp. 983 (E.D. Ark. 1965); Taylor v. Federal Kemper Ins. Co., 534 F. Supp. 196 (W.D. Ark. 1982); Williams v. State Farm Mut. Auto. Ins. Co., 737 F.2d 741 (8th Cir. 1984); Daves v. Hartford Accident & Indem. Co., 302 Ark. 242, 788 S.W.2d 733 (1990).