To Require An Insurer To Include A Lienholder On Payments Made Under An Insurance Policy.
Summary
HB1193 would require a motor vehicle liability insurer to include a lienholder when tendering payment for damages to a motor vehicle if there is an outstanding lien or encumbrance on the vehicle. The requirement applies when an insured or third-party claimant makes a demand or files a claim, whether the matter is handled directly with the insurer or through a court proceeding. In practical terms, the bill directs that payment be issued in the name of both the claimant and the lienholder, rather than to the claimant alone.
The bill amends Arkansas Code Title 23, Chapter 89, Subchapter 2 by adding a new section, Arkansas Code § 23-89-218. Its effect is to change how insurance proceeds for vehicle damage are disbursed when a lender or other secured party has a legal interest in the vehicle. The measure is aimed at protecting lienholders’ interests and ensuring they are included in settlement or claim payments involving damaged vehicles.
Impact
HB1193 would create a new statutory payment rule for motor vehicle insurance claims in Arkansas, requiring insurers to name both the insured or third-party claimant and any lienholder on payments for vehicle damage when an outstanding lien exists. This would affect auto insurers, vehicle owners, claimants, lenders, finance companies, and other lienholders by formalizing joint-payee treatment in covered claims. The bill would add a new section to Arkansas Code Title 23, Chapter 89, Subchapter 2, and would likely influence claims handling, settlement drafting, and payment processing practices.
Sentiment
The available voting history suggests the bill had mixed but generally workable support in the House, where it passed third reading 75-9, indicating broad approval at that stage. However, later third-reading votes of 6-20 and 7-15 suggest the measure encountered stronger resistance or procedural difficulty in subsequent consideration, though no committee transcript is available to explain the debate. Overall, the bill appears to have been viewed as a targeted insurance/secured-interest measure rather than a broad policy overhaul.
Contention
The main point of contention appears to be whether insurers should be legally required to include lienholders on payments for vehicle-damage claims, which can affect how quickly claimants receive funds and how insurers manage settlement obligations. Supporters likely view the bill as protecting lenders and preventing payment disputes when a vehicle is subject to a lien, while opponents may be concerned about added administrative burden, delays in claim resolution, or complications for insureds and third-party claimants. Because no committee transcripts are provided, the specific arguments are not documented, but the split later votes indicate some disagreement over the mandate.