(a) Certification. A “motor vehicle liability policy” as the term is used in this chapter, means an “owner's policy” or an “operator's policy” of liability insurance, certified as provided in § 27-19-712 as proof of financial responsibility for the future, and issued, except as otherwise provided in § 27-19-712 by an insurance carrier duly authorized to transact business in this state, to or for the benefit of the person named therein as insured.
(b) Owner's Policy. The owner's policy of liability insurance shall:
(1) Designate by explicit description or by appropriate reference all vehicles with respect to which coverage is to be granted; and
(2) Insure the person named therein and any other person, as insured, using any vehicle or vehicles with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of the vehicle or vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each vehicle, as follows: twenty-five thousand dollars ($25,000) because of bodily injury to or death of one (1) person in any one (1) accident and, subject to said limit for one (1) person; fifty thousand dollars ($50,000) because of bodily injury to or death of two (2) or more persons in any one (1) accident; and twenty-five thousand dollars ($25,000) because of injury to or destruction of property of others in any one (1) accident.
(c) Operator's Policy. The operator's policy of liability insurance shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him, within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner's policy of liability insurance.
(d) Required Statements in Policies. The motor vehicle liability policy shall state the name and address of the named insured, the coverage afforded by the policy, the premium charged, the policy period, and the limits of liability, and shall contain an agreement or be endorsed that insurance is provided thereunder in accordance with the coverage defined in this subchapter as respects bodily injury and death or property damage, or both, and is subject to all the provisions of this subchapter.
(e) Policy Need Not Insure Workers' Compensation, etc. The motor vehicle liability policy need not insure any liability under any workers' compensation law nor any liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance, or repair of any such vehicle nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.
(f) Provisions Incorporated in Policy. Every motor vehicle liability policy shall be subject to the following provisions which need not be contained therein:
(1) The liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute whenever injury or damage covered by the motor vehicle liability policy occurs; the policy may not be cancelled or annulled as to the liability by any agreement between the insurance carrier and the insured after the occurrence of the injury or damage; no statement made by the insured or on his behalf, and no violation of the policy, shall defeat or void the policy.
(2) The satisfaction by the insured of a judgment for the injury or damage shall not be a condition precedent to the right or duty of the insurance carrier to make payment on account of the injury or damage.
(3) The insurance carrier shall have the right to settle any claim covered by the policy, and if the settlement is made in good faith, the amount shall be deductible from the limits of liability specified in subdivision (b)(2) of this section.
(4) The policy, the written application therefor, if any, and any rider or endorsement which does not conflict with the provisions of this subchapter shall constitute the entire contract between the parties.
(g) Excess or Additional Coverage. Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy and this excess or additional coverage shall not be subject to the provisions of this subchapter. With respect to a policy which grants such excess or additional coverage, the term “motor vehicle liability policy” shall apply only to that part of the coverage which is required by this section.
(h) Reimbursement Provision Permitted. Any motor vehicle liability policy may provide that the insured shall reimburse the insurance carrier for any payment the insurance carrier would not have been obligated to make under the terms of the policy except for the provisions of this subchapter.
(i) Proration of Insurance Permitted. Any motor vehicle liability policy may provide for the prorating of the insurance thereunder with other valid and collectible insurance.
(j) Multiple Policies. The requirements for a motor vehicle liability policy may be fulfilled by the policies of one (1) or more insurance carriers which policies together meet these requirements.
(k) Binders. Any binder issued pending the issuance of a motor vehicle liability policy shall be deemed to fulfill the requirements for a policy.
(l) (1) Extension of Coverage. Every motor vehicle liability insurance policy, every motor vehicle physical damage insurance policy, every motor vehicle uninsured and underinsured motorist insurance policy, and every motor vehicle insurance policy covering death or bodily injury insuring a motor vehicle licensed in this state or the occupants of the motor vehicle shall extend its liability, physical damage, uninsured and underinsured motorist, and death or bodily injury coverages to include any other motor vehicle, operated by the insured individual, and its occupants if the other motor vehicle is:
(A) Loaned by a duly licensed automobile dealer as a temporary substitute, with or without compensation, to the insured individual for use as a temporary substitute vehicle while the insured's vehicle is out of use because of breakdown, repair, or servicing;
(B) Loaned by a duly licensed automobile dealer for use as a demonstrator vehicle; or
(C) Rented or leased from a rental company as defined in § 23-64-202 (d)(2)(C).
(2) The extensions of liability, physical damage, uninsured and underinsured motorist, and death or bodily injury coverages under this subsection are primary to any insurance or self-insurance maintained by the duly licensed automobile dealer or rental company.
History. Acts 1953, No. 347, § 66; 1959, No. 307, § 21; 1981, No. 478, § 4; A.S.A. 1947, § 75-1466; Acts 1989, No. 896, § 1; 1991, No. 394, § 1; 1993, No. 1252, § 1; 1999, No. 1527, § 5; Acts 2007, No. 373, § 2.
Amendments. The 1999 amendment substituted “twenty-five thousand dollars ($25,000)” for “fifteen thousand dollars ($15,000)” following “one (1) accident; and” in (b)(2).
The 2007 amendment added (l)(1), (l)(1)(A), (l)(1)(B) and (l)(2) designations and made punctuation and stylistic changes; added (l)(1)(C); and in (l)(2), substituted “The” for “Provided, however, coverage shall extend to such loaned or demonstrator vehicle only to the extent of the coverage provided, if any, to the automobile being repaired or serviced. Such” and added “to any insurance or self-insurance maintained by the duly licensed automobile dealer or rental company.”
Cross References. Penalty for violation of 1959 amendatory act, § 27-50-305.
Research References
U. Ark. Little Rock L. Rev.
Survey - Insurance, 11 U. Ark. Little Rock L. Rev. 231.
Legislative Survey - Insurance, 16 U. Ark. Little Rock L. Rev. 141.
Oliver, None for the Road: Addressing the Problem of Uninsured Vehicles and Drivers in Arkansas, 21 U. Ark. Little Rock L. Rev. 167.
Case Notes
Applicability.
Exclusionary Clauses.
Governmental Tort Immunity.
Permission to Use Vehicles.
Restrictive Indorsements.
Where pleadings failed to indicate that insurance policy had been used as proof of financial responsibility at time of happening of automobile accident, Arkansas Financial Responsibility Law had no applicability whatever to the insurance policy. Aetna Cas. & Sur. Co. v. Simpson, 228 Ark. 157, 306 S.W.2d 117 (1957).
This subchapter, and particularly subdivision (f)(1) of this section, has no applicability to an insurance policy where the pleadings fail to indicate that the policy in question had been used as proof of financial responsibility. Ramey v. State Farm Mut. Auto. Ins. Co., 54 Ark. App. 307, 924 S.W.2d 835 (1996).
An exclusionary clause, excluding coverage of bodily injury to the insured and members of his family and household, in a policy not used as proof of financial responsibility in the future did not violate this section. State Farm Mut. Auto. Ins. Co. v. Cartmel, 250 Ark. 77, 463 S.W.2d 648 (1971).
Regardless of statutory governmental tort immunity, city which failed to purchase liability insurance as required by statute was responsible as self-insurer for injuries resulting from negligent operation of its vehicles up to amount equivalent to required policy limits stated in this section. Sturdivant v. Farmington, 255 Ark. 415, 500 S.W.2d 769 (1973).
Because there were two emergency vehicles involved in the accident, and each officer was found five percent at fault, the city, as a joint tortfeasor, would be jointly and severally liable in the amount of $25,000.00 for each of the city's vehicles, therefore, defendant should recover $50,000.00 against the city, and the trial court erred in ruling otherwise. City of Caddo Valley v. George, 340 Ark. 203, 9 S.W.3d 481 (2000).
The provision in subsection (b) of this section that an owner's policy of liability insurance “shall insure the person named therein and any other person, as insured, using any vehicle or vehicles with the express or implied permission of such named insured” did not have the effect of extending liability policy to a person driving insured's automobile with the permission of insured's son where insured had forbidden son to allow anyone else to drive the automobile and where automobile was not being driven for the benefit of the son. Dodson v. Sisco, 134 F. Supp. 313 (W.D. Ark. 1955), criticized, Gillen v. Globe Indem. Co., 377 F.2d 328 (8th Cir. Ark. 1967).
If permission to use automobile is initially given, recovery under automobile liability insurance policy may be had under subsection (b) of this section regardless of the manner in which the automobile is thereafter used. Thus the extent of route deviation by borrower in the driving of another's vehicle was immaterial with respect to coverage of automobile liability insurance policy. Commercial Union Ins. Co. v. Johnson, 294 Ark. 444, 745 S.W.2d 589 (1988).
When a statute provides for certain mandatory provisions in a policy of insurance, a restrictive indorsement rider diametrically opposed to such requirements has no effect. General Am. Cas. Co. v. Austin, 125 F. Supp. 721 (E.D. Ark. 1954).
Cited: Thompson v. Sanford, 281 Ark. 365, 663 S.W.2d 932 (1984); Helms v. Southern Farm Bureau Cas. Ins. Co., 281 Ark. 450, 664 S.W.2d 870 (1984); Cousins v. Dennis, 298 Ark. 310, 767 S.W.2d 296 (1989); Liberty Mut. Ins. Co. v. Thomas, 58 Ark. App. 289, 951 S.W.2d 564 (1997); Spears v. City of Fordyce, 351 Ark. 305, 92 S.W.3d 38 (2002).