Tennessee Insurance Claim Denial Laws: Your Rights and How to Appeal (2026)

Tennessee offers strong protections for insurance policyholders facing claim denials. Under TCA § 56-7-105, insurers who act in bad faith can be forced to pay a 25% penalty plus your attorney fees — a powerful deterrent against unfair denials. With a 15-business-day decision deadline, a structured appeal process, and active oversight by the Tennessee Department of Commerce and Insurance, you have clear steps to challenge a wrongful denial.

This guide explains Tennessee’s insurance claim denial laws, your appeal options, and what constitutes bad faith. If your claim was denied, act quickly to preserve your rights.

Tennessee Insurance Claim Denial: Key Facts

Reasons Insurance Companies Deny Claims

Before appealing, understand why your claim was denied. Common reasons include:

• Coverage exclusions — The loss falls under an exclusion in your policy.
• Policy lapsed — Your premium payment was late, and coverage ended before the loss.
• Insufficient proof — You didn’t submit required documentation (receipts, medical records, police reports).
• Exceeds deductible or limit — The claim amount is below your deductible or above your policy limit.
• Misrepresentation on application — The insurer claims you made false statements when applying.
• Waiting period not met — For certain types of coverage (like health insurance), you haven’t met the waiting period.
• Lack of causal connection — The insurer claims the loss wasn’t caused by a covered event.

If the denial lacks a reasonable basis, it may constitute bad faith.

Your Right to Appeal a Denied Claim in Tennessee

Step 1 — Internal Appeal

When your claim is denied, you have 15 business days to appeal internally. Here’s the process:

1. Request denial details in writing — Contact your insurer and ask for a detailed explanation of the denial, including specific policy language and reasons.
2. Gather supporting evidence — Collect receipts, medical records, repair estimates, photographs, and witness statements that support your claim.
3. Submit your appeal — Send a written appeal to your insurer’s appeals department, include all new evidence, and explain why you believe the denial was incorrect.
4. Keep proof of submission — Send via certified mail with return receipt requested.

The insurer must respond to your appeal within a reasonable time, typically 15 business days.

Step 2 — External / Independent Review

For health insurance denials, Tennessee allows external review if:

• Your internal appeal was denied.
• The denial involved a medical necessity determination or coverage interpretation.

To request external review:

1. Contact the Tennessee Department of Commerce and Insurance.
2. Request an independent review of the denial.
3. Submit your policy, denial letter, medical records, and supporting documentation.

The external reviewer will make a binding determination on the denial.

Step 3 — File a Complaint with the Tennessee Department of Insurance

If the internal appeal fails, file a complaint with the Tennessee Department of Commerce and Insurance:

1. Gather all documentation — Policy, denial letter, appeal submission, and supporting evidence.
2. Complete the complaint form — Available at https://tn.gov/commerce/insurance.
3. Explain the bad faith — Describe how the insurer’s actions violated TCA § 56-7-105.
4. Submit to the Department — The DOI will assign an investigator.
5. Participate in investigation — Provide additional information as requested.

The DOI will investigate and may order the insurer to pay your claim and penalties.

Bad Faith Insurance in Tennessee

TCA § 56-7-105 makes it illegal for insurers to commit bad faith. Bad faith includes:

• Denying a claim without reasonable basis or investigation.
• Misrepresenting policy language or coverage.
• Failing to acknowledge obvious coverage.
• Using deceptive tactics to avoid paying claims.
• Unreasonably delaying claim decisions or investigations.
• Refusing to provide documents or explanations without justification.

If you prove bad faith, Tennessee law requires the insurer to pay:

• 25% penalty on the claim amount.
• Attorney fees and costs.
• Compensatory damages for any losses you suffered (medical bills, lost wages, emotional distress).

This powerful statute makes bad faith denials very expensive for insurers, giving you strong leverage in negotiations.

Real Situations in Tennessee

Nashville homeowner, water damage: After a pipe burst, Susan filed a homeowner’s claim. The insurer denied it, claiming the damage was from maintenance failure, not an accident. Susan appealed, submitted expert testimony showing the pipe was defective, and cited TCA § 56-7-105. The insurer reversed the denial, paid the full claim, and added 25% penalty plus attorney fees without requiring litigation.

Memphis auto accident, bodily injury: After a car accident, Tom submitted a liability claim for his injuries. The insurer denied it, claiming he had a pre-existing condition. Tom appealed, provided medical records proving the accident caused new injury, and filed a DOI complaint. The Department found the denial lacked reasonable basis. The insurer settled for the full claim amount plus attorney fees.

Knoxville business, property loss: A small restaurant filed a claim after a break-in and theft. The insurer delayed for 8 weeks without requesting additional information, then denied the claim as untimely. The business owner filed a DOI complaint alleging bad faith delay. The Department ordered the insurer to reconsider, and the claim was ultimately paid with penalties for the unjustified delay.

Common Mistakes Tennessee Policyholders Make

• Missing the 15-business-day deadline — Once you receive a denial, start your appeal immediately. This deadline is strictly enforced.
• Not documenting communication — Send all appeals and inquiries in writing via certified mail. Verbal communications won’t be enforceable.
• Failing to mention bad faith — In your appeal and complaint, explicitly reference TCA § 56-7-105 and explain why you believe bad faith occurred.

Related Guides

• Insurance Rights Guide
• Tennessee Small Claims Court
• Tennessee Consumer Protection Laws
• How to File a Complaint with the FTC or CFPB

This article is for informational purposes only and does not constitute legal advice. Last reviewed: March 2026.