Tennessee Property Insurance Claims: What to Know

Who Regulates Insurance Claims in Tennessee

The Tennessee Department of Commerce and Insurance (TDCI) is the state agency responsible for regulating insurance companies and agents doing business in Tennessee, including how they’re expected to handle claims (TDCI, “Insurance 101”).

TDCI’s Consumer Insurance Services section takes complaints from policyholders about insurers, agents, and agencies. A complaint can be filed online or by mail, using a form that asks for your contact information, the company and policy or claim number involved, and a description of the issue (TDCI, “File an Insurance Complaint”).

What Tennessee Law Requires of Insurers Handling a Claim

Tennessee’s Unfair Claims Settlement Practices Act (Tenn. Code § 56-8-105) sets out specific conduct insurers are prohibited from engaging in when they handle a claim. Among other things, an insurer may not:

• Fail to acknowledge communications about a claim with reasonable promptness
• Fail to adopt reasonable standards for the prompt investigation of claims
• Refuse to investigate a claim without conducting a reasonable investigation
• Fail to attempt, in good faith, a prompt, fair, and equitable settlement of a claim once liability has become reasonably clear
• Fail to give a reasonable and accurate explanation of the basis for denying a claim or for a settlement offer

(Tenn. Code § 56-8-105, text via FindLaw.)

Separately, Tenn. Code § 56-7-105 addresses what happens when an insurer refuses to pay a claim it owes. If an insurer refuses in bad faith to pay a loss within 60 days of a written demand, a court may – in addition to the loss itself – award a penalty of up to 25% of the amount found due (Tenn. Code § 56-7-105, text via FindLaw). This is a legal remedy a court applies case by case; it is not an estimate of what any particular claim is worth, and this page does not evaluate individual claims.

Appraisal Clauses

Many Tennessee property policies include an appraisal clause: a process where the policyholder and the insurer each select an appraiser, and the two appraisers select a neutral umpire to resolve disagreements about the value of a loss. Tennessee courts have held that appraisal is limited to determining the monetary amount of a loss – it does not resolve disputes about whether something is covered in the first place, or what caused the damage. The Tennessee Court of Appeals set out this boundary in Merrimack Mutual Fire Insurance Co. v. Batts (2001), holding that an appraiser’s authority extends only as far as the policy grants it, and that coverage and causation questions are for the insurer and, if necessary, the courts to resolve – not the appraisal panel (summary via Tennessee Insurance Litigation Blog).

Public Adjusters Are a Licensed Category in Tennessee

Tennessee licenses public adjusters – people who represent a policyholder’s interests in negotiating a claim – under the Tennessee Public Adjuster Licensing Act of 2006 (Tenn. Code Title 56, Chapter 6, Part 9). Tennessee law defines advertising for employment as a public adjuster, or soliciting business as one, as itself part of the licensed activity (Tenn. Code Title 56, Chapter 6, Part 9, text via Justia).

This page describes Tennessee insurance law as public information. It does not act as, or offer the services of, a public adjuster, and it does not evaluate, advise on, or estimate the value of any individual claim.

Where This Fits

The guides linked throughout this site – on building a home inventory, compiling a contents list, and documenting damage – cover the recordkeeping side of a claim, which applies the same way regardless of which Tennessee county you’re in. This page covers the state-level legal framework those records eventually feed into.