Ark. Code Ann. § 23-89-102 (2026)
Insolvency of insured does not release liability insurer
- No policy of insurance against loss or damage resulting from accident to or injury suffered by an employee or other person and for which the person insured is liable or against loss or damage to property caused by horses or by any vehicles drawn, propelled, or operated by any motive power and for which loss or damage the person insured is liable shall be issued or delivered to any person in this state unless the policy contains a provision that the insolvency or bankruptcy of the person insured shall not release the insurer from the payment of damages for injury sustained or loss occasioned during the life of the policy.
- The policy must also state that in case execution against the insured is returned unsatisfied because of the insolvency or bankruptcy, in an action brought by the injured or his or her personal representative in case death results from the accident, then an action may be maintained by the injured person or his or her personal representative against the insurer under the terms of the policy for the amount of the judgment in the action not exceeding the amount of the policy.
History. Acts 1959, No. 148, § 448; A.S.A. 1947, § 66-4002.
Research References
Ark. L. Rev.
Uninsured Motorist Insurance Offset for Workmen's Compensation Benefits, 26 Ark. L. Rev. 570.
Case Notes
Appeals.
Where all the conditions of former similar section were met, an appeal without supersedeas did not suspend the right of a plaintiff to proceed against the insurer of an insolvent defendant. Cassidy v. Southern Farm Bureau Cas. Ins. Co., 135 F. Supp. 757 (W.D. Ark. 1955) (decision under prior law).
Bankruptcy.
This section 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 § 23-79-210. Jarboe v. Shelter Ins. Co., 317 Ark. 395, 877 S.W.2d 930 (1994).
Defenses.
Insurance company had a right to make the defense that the policy did not cover the situation of which the injury arose. Equity Mut. Ins. Co. v. Southern Ice Co., 232 Ark. 41, 334 S.W.2d 688 (1960) (decision under prior law).
Direct Action Against Insured.
Where automobile liability policy provided that the insured's insolvency should not release the insurer from liability and that an injured person may sue the insurer for the amount of judgment against the insured if execution is returned unsatisfied, a third party injured was not entitled to bring a direct action against an insurer before recovering judgment against the insured, though the latter was insolvent. Universal Auto. Ins. Co. v. Denton, 185 Ark. 899, 50 S.W.2d 592 (1932) (decision under prior law).
Interest.
Where execution on judgment against tortfeasor was returned unsatisfied and the judgment creditor then obtained judgment against the defendant's insurer, judgment creditor was entitled to interest on the original judgment. Southern Farm Bureau Cas. Ins. Co. v. Robinson, 238 Ark. 159, 379 S.W.2d 8 (1964) (decision under prior law).
Policy Provisions.
As a matter of law, if the conditions stated in former section were not contained in the policy of insurance, the law implied that the policy was issued with reference to the statute and the legal effect is the same if the statutory conditions were actually and fully complied with. Cassidy v. Southern Farm Bureau Cas. Ins. Co., 135 F. Supp. 757 (W.D. Ark. 1955) (decision under prior law).
Cited: State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F. Supp. 784 (E.D. Ark.); Great Am. Ins. Co. v. Ratliff, 242 F. Supp. 983 (E.D. Ark. 1965); Greer v. Mid-West Nat'l Fire & Cas. Ins. Co., 305 F. Supp. 352 (E.D. Ark. 1969).
Subchapter 2 — Automobile Liability Insurance Generally
A.C.R.C. Notes. References to “this subchapter” in §§ 23-89-201 — 23-89-209 and 23-89-211 — 23-89-216 may not apply to § 23-89-210 which was enacted subsequently.
Effective Dates. Acts 1973, No. 138, § 11: July 1, 1974.
Acts 1991, No. 209, § 5: Feb. 21, 1991. Emergency clause provided: “It is hereby found and determined by the General Assembly that the present underinsured motorist insurance coverage law is being misinterpreted; that under the present misinterpretation persons covered by underinsured motorist coverage may not receive the benefits intended by the law; and that this act clarifies the law and should therefore go into effect immediately in order to resolve the misinterpretation as soon as possible. Therefore an emergency is hereby declared to exist and this act being necessary for the preservation of the public peace, health and safety shall be in full force and effect from and after its passage and approval.”
Acts 1991, No. 1123, § 25: July 1, 1991, except § 22, effective Apr. 9, 1991. Emergency clause provided: “It is hereby found and determined by the General Assembly that the laws of this State concerning the insurance matters covered in the subject of this Act are inadequate for the protection of the public. Therefore, an emergency is hereby declared to exist and this Act being necessary for the preservation of the public peace, health and safety all provisions of this Act other than Section 22 shall be in full force and effect from and after July 1, 1991 and Section 22 shall be in full force and effect from and after the passage and approval of this Act.”
Acts 1993, No. 1180, § 7: Apr. 15, 1993. Emergency clause provided: “An emergency is hereby declared to exist and this act being necessary for the preservation of the public peace, health and safety shall be in full force and effect from and after its passage and approval.”
Acts 1995, No. 527, § 6: Mar. 6, 1995. Emergency clause provided: “It is hereby found and determined by the General Assembly that the present insurance laws should be clarified to indicate that once an insured has rejected certain automobile insurance that the insurer should not be required thereafter to notify the insured of the availability of the rejected coverage at such time as the coverage not rejected is renewed, reinstated, substituted, amended, or replaced; that this act so provides; and this act should go into effect immediately in order to clarify the law as soon as possible. Therefore, an emergency is hereby declared to exist and this act being necessary for the immediate preservation of the public peace, health and safety shall be in full force and effect from and after its passage and approval.”
Acts 2003, No. 458, § 2: Mar. 18, 2003. Emergency clause provided: “It is found and determined by the General Assembly of the State of Arkansas that current Arkansas law does not specify that an insurer must pay sales tax when it settles a claim for damages to an automobile as a total loss; that Arkansas law does not make an insurer's failure to pay sales tax when settling a claim for total automobile loss an unfair trade practice; that Arkansas law is not in accord with current insurance regulations concerning settlements for total automobile losses; and that this act is immediately necessary to protect Arkansas insurance consumers and to conform Arkansas law to existing insurance regulations. Therefore, an emergency is declared to exist and this act being immediately necessary for the preservation of the public peace, health, and safety shall become effective on: (1) The date of its approval by the Governor; (2) If the bill is neither approved nor vetoed by the Governor, the expiration of the period of time during which the Governor may veto the bill; or (3) If the bill is vetoed by the Governor and the veto is overridden, the date the last house overrides the veto.”
Acts 2003, No. 998, § 4: July 1, 2003. Emergency clause provided: “It is found and determined by the General Assembly of the State of Arkansas that the lack of compliance with the motor vehicle liability insurance law is epidemic in this state; that the owners of motor vehicles that have not complied with mandatory insurance requirements increase the potential financial catastrophe to others involved in accidents with them; that this act is designed and intended to provide enforcement provisions and to ensure increased compliance with the motor vehicle liability insurance law of this state; and that the enactment of new and enhanced penalties and requirements will increase compliance with the motor vehicle liability insurance law. Therefore, an emergency is declared to exist and this act being necessary for the preservation of the public peace, health, and safety shall become effective on July 1, 2003.”
Acts 2005, No. 506, § 54: Mar. 2, 2005. Emergency clause provided: “It is found and determined by the General Assembly of the State of Arkansas that the laws of this state as to insurance regulation and the Governmental Bonding Board, among others, are inadequate for the protection of the public, and the immediate passage of this act is necessary in order to provide for the adequate protection of the public. Therefore, an emergency is declared to exist and this act being immediately necessary for the preservation of the public peace, health, and safety shall become effective on: (1) The date of its approval by the Governor; (2) If the bill is neither approved nor vetoed by the Governor, the expiration of the period of time during which the Governor may veto the bill; or (3) If the bill is vetoed by the Governor and the veto is overridden, the date the last house overrides the veto.”
Acts 2007, No. 485, § 9: Jan. 1, 2008.
Research References
Am. Jur. 7 Am. Jur. 2d, Auto. Ins., § 1 et seq.