Ark. Code Ann. § 23-89-209 (2026)

Research References

ALR.

Comment Note: Amount in Controversy Jurisdictional Requirement under Class Action Fairness Act (CAFA). 5 A.L.R. Fed. 3d Art. 2 (2016).

Ark. L. Notes.

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.

Note, Shelter Mutual Insurance Co. v. Irvin — The Arkansas Supreme Court's Retroactive Application of the Amended Underinsured Motorist Act, 46 Ark. L. Rev. 737.

Recent Developments, 49 Ark. L. Rev. 207.

Mark James Chaney, Recent Developments: The Arkansas Supreme Court Reaffirms Its Precedent Requiring Plaintiffs to Exhaust the Liability Policies of All Tortfeasors Before Receiving Underinsured Motorist (UIM) Benefits, Despite the Civil Justice Reform Act’s Elimination of Joint Liability for Multiple Tortfeasors, 66 Ark. L. Rev. 1145 (2013).

U. Ark. Little Rock L.J.

Fifteenth Annual Survey of Arkansas Law, 15 U. Ark. Little Rock L.J. 427.

Legislative Survey, Insurance, 16 U. Ark. Little Rock L.J. 141.

Chamberlin & Holt, Why Arkansas Should Overturn its Anti-Stacking Precedent: A Look at Aggregating Uninsured and Underinsured Motorist Coverage, 21 U. Ark. Little Rock L. Rev. 413.

Annual Survey of Caselaw, Insurance Law, 25 U. Ark. Little Rock L. Rev. 1010.

Case Notes

In General.

Underinsured motorist coverage provides benefits when the policyholder, involved in an accident with another vehicle, is legally entitled to recover damages that exceed the offending motorist's insurance coverage. Edens v. Shelter Mut. Ins. Co., 923 F.2d 79 (8th Cir. 1991).

This section sets forth the general purpose of the coverage, not the amount. Ross v. United Servs. Auto. Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995).

The legislative intent is clear that the inability to obtain the limits of liability coverage is what triggers the availability of underinsured motorist (UIM) coverage. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000).

The statute does not require insurers issuing commercial automobile liability policies to offer underinsured-motorist coverage. Monday v. Canal Ins. Co., 348 Ark. 435, 73 S.W.3d 594 (2002).

Construction.

The presence of the emergency clause in Section 5 of the 1991 amendment persuaded the court to apply the amendment retroactively. Henderson v. Universal Underwriters Ins. Co., 768 F. Supp. 688 (E.D. Ark. 1991).

The 1991 amendment to § 23-89-209 makes it clear that the legislature intended the 1987 Act, when passed, to provide that an insured's recovery of underinsured motorist coverage should not be reduced or set-off by the amount received from the tortfeasor. Henderson v. Universal Underwriters Ins. Co., 768 F. Supp. 688 (E.D. Ark. 1991).

The specific expression in 1991 Ark. Act 1123 that the written rejection requirement be effective on “February 21, 1991, or the first renewal after February 21, 1991” indicates the legislature intent that the initial requirement of offering the underinsured motorist coverage be effective on July 20, 1987, or the first renewal after July 20, 1987. Nixon v. H & C Elec. Co., 307 Ark. 154, 818 S.W.2d 251 (1991).

Subsection (a) was amended a second time by Section 22 of Act 1123 of 1991, but the amendments made by Act 209 of 1991 were not affected. American Cas. Co. v. Mason, 312 Ark. 166, 848 S.W.2d 392 (1993).

The 1991 amendments made it clear that, prior to 1991, the legislature did not intend an insurer to have a duty to offer the underinsured motorist coverage after the insured rejected coverage in writing. Warford v. State Farm Mut. Auto. Ins. Co., 69 F.3d 860 (8th Cir. 1995).

Trial court erred in refusing to direct a verdict in insurance company's favor because its underinsured motorist coverage excluded the definition of an uninsured motor vehicle from an underinsured vehicle and erred in particular on the plain meaning of this section, which clearly refers to “the tortfeasor's insurance coverage.” State Farm Mut. Auto. Ins. Co. v. Beavers, 321 Ark. 292, 901 S.W.2d 13 (1995).

The exclusive remedy provision of § 11-9-105 does not bar an employee from being legally entitled to recover under the underinsured motorist statute against a co-employee who was the owner or operator of the vehicle in which the employee was riding at the time of the injury. Southern Farm Bureau Cas. Ins. Co. v. Pettie, 54 Ark. App. 79, 924 S.W.2d 828 (1996).

The statute does not void an insurance company's common law subrogation rights. Hartford Ins. Co. v. Mullinax, 336 Ark. 335, 984 S.W.2d 812 (1999).

There is a distinction between uninsured (UM) and underinsured (UIM) coverage. UM coverage applies when a tortfeasor either has no insurance or has less than the amount required by law, and UM coverage is designed to guarantee a minimum recovery equal to that amount. UIM coverage applies when the tortfeasor has at least the amount of insurance required by law but not enough to fully compensate the victim. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000).

Section 23-89-209(a) does not broadly specify any class of persons for coverage other than “the insured.” Therefore, a reduction clause in a motor vehicle insurance policy did not violate § 23-89-209(a)(5) where a passenger was not entitled to recover pursuant to an underinsured motorist policy after receiving payment under the liability provision of the same policy. Nash v. American Nat'l Prop. & Cas. Co., 98 Ark. App. 258, 254 S.W.3d 758 (2007).

Insured was not entitled to underinsured-motorist coverage under a personal umbrella liability policy endorsement to an insurance policy issued by the insurer because an obligation to offer uninsured-motorist coverage was a prerequisite to an insurer's obligation to offer underinsured-motorist coverage under this section, an insurer was not obligated under § 23-89-403(a)(3)(B) to offer uninsured-motorist coverage in conjunction with an umbrella policy, and thus, an insurer issuing an umbrella policy had no obligation to offer underinsured-motorist coverage to its insured. Econ. Premier Assur. Co. v. Everhart, 623 F. Supp. 2d 988 (W.D. Ark. 2009).

Applicability.

Under Arkansas choice of law rules, a Kansas statute mandating anti-stacking provisions, and not this section, applied to an insurance policy where, at the time the policy of insurance was issued and at the time of the accident, the policy holders resided in Kansas and where the policy of insurance was issued to cover an automobile to be garaged in Kansas and presumably to be driven there even though the accident occurred in Arkansas. Lienemann v. King, 832 F. Supp. 257 (W.D. Ark. 1993), aff'd without op., 26 F.3d 126 (8th Cir. Ark. 1994).

It is practical and pure common sense that underinsurance should not pertain until it is determined whether the insured is in fact underinsured. State Farm Mut. Auto. Ins. Co. v. Thomas, 316 Ark. 345, 871 S.W.2d 571 (1994).

Underinsured coverage does not apply when the insured is struck by an uninsured motorist. State Farm Mut. Auto. Ins. Co. v. Beavers, 321 Ark. 292, 901 S.W.2d 13 (1995).

To allow uninsured and underinsured coverage to apply to the same accident would permit a double recovery in the face of clear statutory and policy language to the contrary. State Farm Mut. Auto. Ins. Co. v. Lindsey, 54 Ark. App. 390, 926 S.W.2d 850 (1996).

The amount of damages incurred by the insured for bodily injury and the amount of the liability insurance benefits that the insured has recovered from the tortfeasor must be known before payment by the underinsurance carrier is required. Hartford Ins. Co. v. Mullinax, 336 Ark. 335, 984 S.W.2d 812 (1999).

Trial court's decision to award interest, as well as attorney fees and a penalty, was justified because injured driver had notified her insurer that she had settled with the other driver's insurer and her insurer knew, from the time that she made her demand, that it was liable under injured driver's underinsured motorist policy. Nationwide Mut. Ins. Co. v. Cumbie, 92 Ark. App. 448, 215 S.W.3d 694 (2005).

Attorney's Fees.

This section allows the recovery of attorney's fees where an insurer fails to pay benefits when they become due, but it adds nothing as to the amount of the fees to be allowed. State Farm Mut. Auto. Ins. Co. v. Brown, 48 Ark. App. 136, 892 S.W.2d 519 (1995).

Trial court did not err in granting an insured's motion for attorney fees pursuant to § 23-79-209 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).

Compliance.

Insurance company complied with this section where it gave the named insured the opportunity to purchase underinsured motorist coverage by conspicuously including an option for such coverage on the face of the standard policy application. Edens v. Shelter Mut. Ins. Co., 923 F.2d 79 (8th Cir. 1991).

Where there was no provision for underinsured motorist coverage in policy and insurer gave no oral notice that such coverage was available and never sent any written materials describing or offering the coverage, mandate of this section that insurers offer underinsured coverage was not met by mere printing of the term “underinsured motorist” on an application without explanation or mention of it to the insured. Shelter Mut. Ins. Co. v. Bough, 310 Ark. 21, 834 S.W.2d 637 (1992); Shelter Mut. Ins. Co. v. Irvin, 309 Ark. 331, 831 S.W.2d 135 (1992).

To sustain an action against insurer, the insured must prove that insurer failed to fulfill its duty under this section to make underinsured motorist coverage available to him at the time he took out his policy; it is the act of failing to inform an insured about the availability of underinsured motorist coverage that triggers the trial court's implying such coverage by operation of law. Calcagno v. Shelter Mut. Ins. Co., 330 Ark. 802, 957 S.W.2d 700 (1997).

Because a motor vehicle insurance policy did not violate this section by excluding from its definition of underinsured motor vehicle any covered motor vehicle, a passenger who was injured in an accident was not entitled to recover under the policy's underinsured motorist coverage. Humphries v. Nationwide Mut. Ins. Co., 97 Ark. App. 125, 245 S.W.3d 156 (2006).

Consent Clauses.

In cases involving a consent clause, the insured cannot hold the insurer liable, without its consent, upon a judgment obtained in an action in which the insurer was not a party, and whether underinsured motorist coverage or uninsurered motorist coverage is included does not make a difference. Ross v. State Farm Mut. Auto. Ins. Co., 41 Ark. App. 75, 848 S.W.2d 948 (1993).

Coverage.

This section does not broadly specify any class of persons for coverage other than “the insured” and, therefore, does not require that a policy provide coverage to an occupant in a vehicle owned by another person while that vehicle is being driven by the insured. Foster v. Farm Bureau Mut. Ins. Co., 71 Ark. App. 132, 27 S.W.3d 464 (2000).

Although subdivision (a)(3) of this section provides that underinsured coverage must provide coverage for damages from the operator of another vehicle, the parties may agree to extend the underinsured coverage to operation of the insured vehicle by an underinsured driver; where policy language is ambiguous, the court will construe the policy liberally in favor of the insured and strictly against the insurer. Lewis v. Mid-Century Ins. Co., 362 Ark. 591, 210 S.W.3d 113 (2005).

Insurer did not meet its burden of proving that the amount in controversy exceeded $75,000 for an insured's individual claim as required by 28 U.S.C.S. § 1332(a) because before including attorney's fees, the maximum amount the insured could seek was $41,754 under §§ 23-89-202, 23-89-208, and this section, and to reach $75,000, a court would need to award more than $33,000 in attorney's fees, which seemed unlikely; however, the undisputed facts showed that the value of the insurance at issue, measured by the amount that the insurer would charge for the coverages at issue, exceeded $10,000,000, and thus, the amount in controversy for class claims exceeded $5,000,000, the minimum amount for jurisdiction pursuant to the Class Action Fairness Act, 28 U.S.C.S. § 1332(d), and because the insured could not show “to a legal certainty” that the pay-out for the claims of the class would be less than $5,000,000, her motion to remand was denied. Toller v. Sagamore Ins. Co., 558 F. Supp. 2d 924 (E.D. Ark. 2008).

Duty of Insurer.

This section contemplates payment by the tortfeasor's insurance company, and also contemplates a determination of the injured party's damages; there is no directive under this section that the underinsured carrier must investigate and evaluate a claim prior to the payment of liability coverage by the tortfeasor's insurance company. State Farm Mut. Auto. Ins. Co. v. Thomas, 316 Ark. 345, 871 S.W.2d 571 (1994).

After insured's initial rejection of underinsured coverage, insurer was not required to re-notify insured of the availability of underinsured coverage when the insured amended his policy by adding vehicles to the policy. Colonia Underwriters Ins. Co. v. Richardson, 325 Ark. 300, 924 S.W.2d 808 (1996).

Where the plaintiff's parents entered into a contract for automobile insurance and rejected underinsured motorist coverage, the insurance company was not required to offer underinsured motorist coverage to the plaintiff when she was later added to the policy as an additional operator. Majors v. American Premier Ins. Co., 334 Ark. 628, 977 S.W.2d 897 (1998).

It was unclear, based on the current record, whether or not a district court could assert jurisdiction under 28 U.S.C.S. § 1332(a) and (d) over a class action suit brought by an insured on her own behalf and on behalf of a class of fellow Arkansas policyholders who owned automobile liability policies issued by an insurance company. Although theoretically the amount that the insurance company would have to pay, if it was required to provide no fault coverage to all of the class members as required by §§ 23-89-202, 23-89-403, 23-89-404, and this section would exceed 28 U.S.C.S. § 1332(d) amount in controversy requirements, there was no evidence showing how much the company might actually have to pay, as not every class member would get in an accident or be entitled to no fault benefits. Toller v. Sagamore Ins. Co., 514 F. Supp. 2d 1111 (E.D. Ark. 2007).

Exclusion.

The exclusion for underinsured motor vehicle coverage which provided no coverage for bodily injury to an insured occupying a vehicle not insured under that policy was reasonable because it excluded a material, unassumed risk for which the insurance company could be expected to charge a higher premium, and it would be unfair to ask other insureds to share the cost of increased exposure. Clampit v. State Farm Mut. Auto. Ins. Co., 309 Ark. 107, 828 S.W.2d 593 (1992).

The fact that the legislature chose to specifically require the offering of underinsured-motorist coverage only in conjunction with the issuance of “private passenger automobile liability insurance” policies demonstrates its desire to exclude commercial policies from the requirements of this section. Monday v. Canal Ins. Co., 348 Ark. 435, 73 S.W.3d 594 (2002).

Implied Coverage.

Where the insurer failed to make underinsured coverage available, such coverage was implied by operation of law. Shelter Mut. Ins. Co. v. Irvin, 309 Ark. 331, 831 S.W.2d 135 (1992).

If an insurer fails to comply with this section, a court may imply underinsured motorist coverage by operation of law. Warford v. State Farm Mut. Auto. Ins. Co., 69 F.3d 860 (8th Cir. 1995).

Legislative Intent.

The General Assembly intended, under this section, for an insured to receive the limits of underinsured motorist coverage over and above any recovery from the tortfeasor's carrier if that recovery was not adequate to fully compensate the insured. Shepherd v. State Auto Property & Cas. Ins. Co., 312 Ark. 502, 850 S.W.2d 324 (1993).

The legislature intended underinsured motorist benefits to be provided without regard to the amount of insurance carried by any liable party. Shepherd v. State Auto Property & Cas. Ins. Co., 312 Ark. 502, 850 S.W.2d 324 (1993).

Limits of Recovery.

The injured policyholder should only receive the limits of his underinsured coverage if his total damages equal or exceed that limit plus the amount received from the tortfeasor. Henderson v. Universal Underwriters Ins. Co., 768 F. Supp. 688 (E.D. Ark. 1991).

Under the “difference of limits” or “excess” method of computation of benefits, an insured is not entitled to underinsured motorist benefits when the responsible party's liability insurance limit equals or exceeds the amount of the insured's underinsured coverage; under the “add-on” method of computation of benefits, an insured can receive the limits of his underinsured motorist coverage over and above any recovery from the responsible party if that recovery is not adequate to fully compensate the insured. American Cas. Co. v. Mason, 312 Ark. 166, 848 S.W.2d 392 (1993).

An insured is entitled to recover underinsured motorist coverage benefits for damages sustained which exceed the coverage of the tortfeasor irregardless the amount of the tortfeasor's liability insurance. American Cas. Co. v. Mason, 312 Ark. 166, 848 S.W.2d 392 (1993).

The legislature intended underinsured motorist benefits to be provided without regard to the amount of insurance carried by any liable party. American Cas. Co. v. Mason, 312 Ark. 166, 848 S.W.2d 392 (1993).

Under subsection (a) of this section, both before and after the 1993 amendment, the legislative intent is clear that the inability to obtain the limits of liability coverage is what triggers the availability of underinsured benefits. Birchfield v. Nationwide Ins., 317 Ark. 38, 875 S.W.2d 502 (1994).

This section and § 27-19-605 clearly mandate that a minimum of $25,000 underinsured coverage be offered and not an amount equal to the liability insurance purchased by the insured; therefore, when underinsurance is implied by law under this section, the insured will be limited to the minimum amount referred to in the statute. Ross v. United Servs. Auto. Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995).

Underinsured coverage applies when the tortfeasor has at least the minimum amount of insurance required by law but not enough to fully compensate the victim, and is designed to provide compensation to the extent of the injury, subject to the policy limits. Southern Farm Bureau Cas. Ins. Co. v. Pettie, 54 Ark. App. 79, 924 S.W.2d 828 (1996).

For purposes of determining whether 28 U.S.C.S. § 1332(a) amount in controversy requirements, a district court ignored medical expenses included in a $50,000 payment that was tendered by a third party insurer after an insured's complaint against an insurance company was filed, but before the case was removed from a state court. Pursuant to subsection (d) of this section, the insured could not seek to recover payment of those medical expenses from the company. Toller v. Sagamore Ins. Co., 514 F. Supp. 2d 1111 (E.D. Ark. 2007).

Summary judgment was properly awarded to an insurer in insureds' action for UIM coverage under subdivision (a)(3) of this section because the policy language at issue was not ambiguous; under the terms of the policy, UIM coverage was not triggered until all policy limits were exhausted. Corn v. Farmers Ins. Co., 2013 Ark. 444, 430 S.W.3d 655 (2013).

Rejection of Coverage.

The rejection of underinsured motorist coverage obtained from the plaintiff in 1987 was effective and a second or subsequent rejection was not required by the 1991 amendments nor was one required when a vehicle was substituted for the original vehicle. Warford v. State Farm Mut. Auto. Ins. Co., 871 F. Supp. 1085 (W.D. Ark. 1994), aff'd, 69 F.3d 860 (8th Cir. 1995).

An attempt to deny coverage before the insured has been fully compensated would not be permitted by the statute. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000).

Where insured was injured when a car crashed into the wall of her business, the trial court properly granted summary judgment for the insurance company which denied the insured underinsured motorist coverage and personal injury protection coverage based upon the clear and unambiguous terms of the policy's business premises exclusion; moreover, waiver was not available to extend the coverage merely because the insurer's agent thought coverage might be available. Harasyn v. St. Paul Guardian Ins. Co., 349 Ark. 9, 75 S.W.3d 696 (2002).

Stacking.

Because this section requires the insurance company to offer as a minimum underinsured coverage for each car, when an insured has more than one car covered with the insurance company, the insured may stack the minimum coverages that should have been offered. Ross v. United Servs. Auto. Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995).

Although stacking of UIM coverages is not prohibited by statute, it may be precluded by an applicable anti-stacking clause in the policy. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000).

Stacking was denied to passenger where his policy plainly provided that it would apply “only as excess insurance over any other similar insurance available to the insured as primary insurance” and the vehicle owner's insurance was considered primary. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000).

Summary judgment in favor of the insurers on the administratrix's action for recovery of underinsured motorist (UIM) benefits was proper as the insurance provisions of the policies issued by the insurers were unambiguously incorporated into the UIM endorsement, did not violate this section, and did not violate public policy; the insurers were allowed to prohibit stacking of benefits. Couch v. Farmers Ins. Co., 375 Ark. 255, 289 S.W.3d 909 (2008).

Time Limitations.

A policyholder may recover against the insurer even though the statute of limitations has run in favor of the uninsured motorist and even though the plaintiff has dismissed his suit against the uninsured motorist with prejudice. Southern Farm Bureau Cas. Ins. Co. v. Pettie, 54 Ark. App. 79, 924 S.W.2d 828 (1996).

The statute of limitations for an insurance agent's negligence commences at the time the negligent act occurs. Calcagno v. Shelter Mut. Ins. Co., 55 Ark. App. 321, 934 S.W.2d 548 (1996), aff'd, 330 Ark. 802, 957 S.W.2d 700 (1997).

Cited: Weigel v. Farmers Ins. Co., 356 Ark. 617, 158 S.W.3d 147 (2004).