Insurance companies have an obligation to act in good faith and not engage in unfair tort practice. The Tennessee Attorney has announced this obligation in T.C.A. § 56-8-105, which describes 15 specific acts that constituted unfair claims denoting bad faith. 1 Such unfair claims include: (1) knowingly misrepresentation of relevant facts or policy provisions regarding coverage of problems; (2) fails to confirm at reasonable speed relevant communication regarding claims arising under its policy; (3) failure to adopt and implement reasonable standards for the rapid investigation and settlement of receivables arising under its policy; and (4) failure to confirm or deny coverage of claims within a reasonable time after proof of losses has been completed. 2 What can an insured do when a violation of this statue occurs?
an insured person sues the insurance company for his conduct, but the Tennessee legislature has cut off that recovery path in TCA § 56-8-1
How did we get to this point? Since 1901, insured persons had several options for recovery, from breach of contract, bad faith, Tennessee Consumer Protection Act ("TCPA") and other tort remedies with criminal and / or consequential damages. However, bad faith claims and claims under TCPA are no longer available despite their successful implementation. 4 In Brooks v. Tennessee Farmers Mutual Insurance Company a tornado damaged the insured home. Here, the Tennessee Court of Appeal upheld the court's ruling which favored insured awarding of general damages and consequential damages, triple damages and attorney's fees and costs of violating insurance policy and intentional and knowingly unfair and misleading acts or practices contrary to TCPA. 5 If this loss and case had been filed two years later, the insured would only receive general damages for violating the insurance policy, despite the insurance company's difficult actions discussed in the court's opinion.  I have been under investigation under oath and worked on a number of allegations in Tennessee this week. I would like to remind policyholders, public adjusters and contractors in Tennessee that the one-year policy of shortening the limitation period can be enforceable under Tennessee law. 6 Insured persons should pay special attention to the time limit for bringing an action, or they may find themselves with very little resources.
1 Tenn. code Ann. § 56-8-105 (1) – (15).
2 Tennkod Ann. § 56-8-105 (1), (2), (3) and (7).
3 Tennkod Ann. § 56-8-101.
4 Myint v. Allstate Ins. Co. 970 S.W.2d 920, 925 (Tenn. 1998); Gaston vs. Tennessee Farmers Mut. Ins. Co. 120 S.W.3d 815, 823 (Tenn. 2003); Johnson vs. Tennessee Farmers Mut. Ins. Co. 205 S.W.3d 365, 370 (Tenn. 2006); Brooks v Tennessee Farmers Mutual Ins. Co. 2014 WL 6735129, No. M2013-02326-COA-R3-CV (Tenn. Ct. App., November 26, 2014).
5 Brooks 2014 WL 6735129.
6 Contractually Limited Defense Using Equitable Estoppel Against Tennessee Insurance Policies PROPERTIES. TÄCKLAGSBLOGG (26 December 2020), https://www.propertyinsurancecoveragelaw.com/2020/12/articles/insurance/contractual-limitation-defense-using-equitable-estoppel-again–tennessee-insurance-policies/