Arkansas Code Annotated
Ark. Code Ann. § 23-90-103 (2020)
Definitions
✓ Arkansas Code release r76: Acts through about 2020 (2021-2025 sessions missing)
As used in this chapter:
- “Commissioner” means the Insurance Commissioner;
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- “Covered claim” means an unpaid claim of an insured or third-party liability claimant which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this chapter applies, and which is issued or assumed, whereby an assumption certificate is issued to the insured, by an insurer licensed to do business in this state, in cases in which the insurer becomes an insolvent insurer and the third-party claimant or liability claimant or insured is a resident of this state at the time of the insured event, or the property from which the claim arises is permanently located in this state.
- Covered claims shall also include one hundred percent (100%) of unearned premiums up to an amount not exceeding twenty-five thousand dollars ($25,000) per policy.
- Individual covered claims, excluding workers' compensation claims, shall be limited to three hundred thousand dollars ($300,000) and shall not include any amount in excess of three hundred thousand dollars ($300,000).
- A covered claim shall not include an unpaid claim of an insured or third-party liability claimant whose net worth as of December 31 of the year next preceding the date the insurer becomes an insolvent insurer exceeds fifty million dollars ($50,000,000). However, an insured's or third-party liability claimant's net worth on that date shall be deemed to include the aggregate net worth of the insured or third-party liability claimant and all of its affiliates as calculated on a consolidated basis.
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A covered claim shall not include any of the following amounts:
- Any amount awarded as punitive or exemplary damages;
- Any amount sought as return of premium under any retrospective rating plan; or
- Any amount due to any reinsurer, insurer, insurance pool, or underwriting association as subrogation recoveries or otherwise. This subdivision (2) shall not prevent the reinsurer, insurer, insurance pool, or underwriting association from presenting the excluded claim to the insolvent insurer or the liquidator, but the claim shall not be asserted against any other person, including the person to whom benefits were paid or the insured of the insolvent insurer, except to the extent that the claim is outside the coverage provided herein or is in excess of the limits of the policy issued by the insolvent insurer.
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- A covered claim shall not include supplementary payment obligations, including, but not limited to, adjustment fees and expenses, attorney's fees and expenses, court costs, interest, and bond premiums incurred prior to the determination that an insurer is an insolvent insurer under this chapter;
- With respect to a covered claim for unearned premiums, persons who were residents of this state at the time the policy was issued and persons who are residents of this state at the time the company is found to be an insolvent insurer shall be considered to have covered claims under this chapter;
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- “Insolvent insurer” means an insurer which, after March 30, 1977, is determined to be insolvent by a court of competent jurisdiction;
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- “Insurer” means any person who writes any kind of insurance to which this chapter applies under § 23-90-104, including the exchange of reciprocal or inter-insurance contracts, and is licensed to transact insurance in this state.
- However, this chapter shall not apply to those persons transacting business as a farmers' mutual aid association pursuant to §§ 23-73-101 — 23-73-107, 23-73-110 — 23-73-114, and 23-73-116;
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- “Net direct written premiums” means the gross amount of premiums received from policies of insurance issued in this state to which this chapter applies, less return premiums and dividends paid or credited to policyholders.
- “Net direct written premiums” does not include premiums for indemnity reinsurance accepted from other licensed insurers, and there shall be no deductions for premiums for indemnity reinsurance ceded to other insurers;
- “Payment of covered claims” means actual payment and also means utilization of funds derived from assessments for consummation of contracts of reinsurance or assumption of liabilities or contracts of substitution to provide for liabilities for covered claims; and
- “Person” means any individual, corporation, partnership, association, or voluntary organization.
History. Acts 1977, No. 871, § 5; A.S.A. 1947, § 66-5505; Acts 1987, No. 738, § 2; 1993, No. 901, § 45; 1995, No. 1272, § 25; 1999, No. 881, § 15; 2017, No. 283, § 18.
Amendments. The 2017 amendment inserted “excluding workers' compensation claims” in (2)(A)(iii).
Case Notes
Covered Claim.
—Default.
Where contractor was not in default on the contract within the critical time period, the highway department did not have a claim. Arkansas State Hwy. Comm'n v. Union Indem. Ins. Co., 295 Ark. 273, 748 S.W.2d 338 (1988).
—Resident of This State.
A foreign corporation which has its principal place of business elsewhere but which established a substantial presence in Arkansas is not considered a resident, as that term is used in subdivision (2)(A) of this section, for the purpose of this subchapter. Douglass v. Levi Strauss & Co., 315 Ark. 380, 868 S.W.2d 70 (1993).
Nothing in the remainder of this subchapter makes an exception to the residency requirement. Douglass v. Levi Strauss & Co., 315 Ark. 380, 868 S.W.2d 70 (1993).
Insured was not entitled to have the state's Guaranty Fund pay the claims against it based on the fact that the insurance company of the insured was insolvent since the insured's claims were not “covered claims”; for a claim to be covered, Arkansas law required that the insured and its affiliate not have a net worth exceeding $50 million, but the insured admitted that the net worth of the Nevada corporation that had purchased all of the insured's stock exceeded that amount and the Nevada corporation's control of all of the insured's stock meant the Nevada corporation was an “affiliate” whose net worth was properly counted in determining the insured's total net worth. Harold Ives Trucking Co. v. Pickens, 355 Ark. 407, 139 S.W.3d 471 (2003).
Notes of Decisions
Cited in 6
cases, 1988–2006 · leading case: Harold Ives Trucking Co. v. Pickens, 139 S.W.3d 471 (Ark. 2003).
Harold Ives Trucking Co. v. Pickens, 139 S.W.3d 471 (Ark. 2003). “Therefore, the court concluded, the unpaid claims of Harold Ives were not covered claims as defined under § 23-90-103 (2) (B) of the Act. On appeal, Harold Ives argues that the trial court erred in its interpretation of the net worth exclusion.”
Hopkins v. Howard, 930 So. 2d 999 (La. Ct. App. 2006). “In answering this question in the affirmative, the court relied upon three factors: (i) the Arkansas jurisprudential rule that "common sense is a key element in defining statutory construction"; (ii) the dictionary definition of the term affiliate in Black's Law Dictionary (7th…”
Seward v. Bud Avants Co., 985 S.W.2d 332 (Ark. Ct. App. 1999). “The Arkansas Property and Casualty Insurance Guaranty Fund is a statutorily created entity ( Ark. Code Ann. § 23-90-101-123 (Repl. 1992)) that assumes the responsibility to satisfy certain obligations of insurers that become insolvent.”
Douglass v. Levi Strauss & Co., 868 S.W.2d 70 (Ark. 1993). “” Its purpose, declared in § 23-90-102, is to provide funds in addition to assets of insolvent insurers for the protection of “covered claims” against such insurers which would otherwise go unpaid.”
Arkansas State High. Comm'n v. Union Indem. Ins., 748 S.W.2d 338 (Ark. 1988). “[§ 23-90-103] No contingent and unliquidated claim shall share in a distribution of the assets of an insurer which has been adjudicated to be insolvent by an order made pursuant to this chapter, except that the claim shall be considered, if properly presented, and may be allowed…”
Wal-Mart Stores, Inc. v. Douglass, 920 S.W.2d 857 (Ark. Ct. App. 1996). “The appellee asserted that the Fund is responsible only for the payment of “covered claims” as defined by Ark. Code Ann. § 23-90-103 (2); and that because, under the Eighth Circuit opinion, there is no valid policy of insurance, there are no “covered claims.”
Ark. Code Ann. § 23-90-103(2): 1 case
Harold Ives Trucking Co. v. Pickens, 139 S.W.3d 471 (Ark. 2003). “Therefore, the court concluded, the unpaid claims of Harold Ives were not covered claims as defined under § 23-90-103 (2) (B) of the Act. On appeal, Harold Ives argues that the trial court erred in its interpretation of the net worth exclusion.”
Ark. Code Ann. § 23-90-103(2)(A): 1 case
Harold Ives Trucking Co. v. Pickens, 139 S.W.3d 471 (Ark. 2003). “Therefore, the court concluded, the unpaid claims of Harold Ives were not covered claims as defined under § 23-90-103 (2) (B) of the Act. On appeal, Harold Ives argues that the trial court erred in its interpretation of the net worth exclusion.”
Ark. Code Ann. § 23-90-103(2)(B): 2 cases
Hopkins v. Howard, 930 So. 2d 999 (La. Ct. App. 2006). “In answering this question in the affirmative, the court relied upon three factors: (i) the Arkansas jurisprudential rule that "common sense is a key element in defining statutory construction"; (ii) the dictionary definition of the term affiliate in Black's Law Dictionary (7th…”
Harold Ives Trucking Co. v. Pickens, 139 S.W.3d 471 (Ark. 2003). “Therefore, the court concluded, the unpaid claims of Harold Ives were not covered claims as defined under § 23-90-103 (2) (B) of the Act. On appeal, Harold Ives argues that the trial court erred in its interpretation of the net worth exclusion.”
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