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Is a Statutory Infringement of Good Faith Available to Tennessee Policyholders – Part III | Real estate insurance coverage law blog



This blog follows a previous blog post, Tennessee Bad Faith Claims: Is a Statutory Good Faith Breach Available for Tennessee Insurance Holders – Part II . This post is to end the series dated May 25, 2021 and June 8, 2021.

In this series so far, we learn that T.C.A. § 56-8-101 (c) restricts policyholders from claiming breach of good faith and fair trade when adjusters do not respond and when the insurer fails to confirm or deny coverage within a reasonable time. We further learn that even if the above is restrictive, a policyholder can still sue an insurance company for bad faith to pay under Tenn. Code Ann. §56-7-105 (a) .

A recent case in the 6th Circuit Court of Appeal dealt with the availability of outside damages to policyholders and whether the statutory measures were the only remedies for bad faith. 1

This case involved a dispute over a life insurance policy. The plaintiff was awarded damages by the jury. The insurer appealed, claiming that the district court erred in failing to dismiss the claim for damages because the statutory remedy for bad faith was the exclusive contractual remedy in Tennessee.

The 6th Circuit stated that the statutory remedy for bad faith was not the exclusive measure of an insurer's bad faith and that a policyholder is free to pursue common legal requirements and remedies in addition to a statutory requirement of bad faith. 2 The Court further noted:

[T] the new Charter expressly rejects all effects on the availability of common remedies such as criminal damages: “Nothing in this section shall be construed to eliminate or otherwise affect any action 1945 [r] , cause of action, right to exemption or sanctions under common law [.] ” 3

Although this case may currently mean that policyholders in Tennessee can seek damages and other extra contractual damages outside of those provided of tatute, the validity of this opinion is questioned, a decision of the Tennessee Supreme Court or a Tennessee Court of Appeal can, and will probably resolve these issues.
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1 Lindenberg vs. Jackson Nat & # 39; l Life Ins. Co. 912 F.3d 348 (6th Cir. 2018).
2 Id. at 359.
3 Id. at 359-60, with reference to T.C.A. §56-8-113.


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