Guide for Causes of Action for Bad Faith Claims

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Last Updated
July 20, 2021

Tennessee recognizes a private cause of action for bad faith by statute: TCA Sections 47-18-104, 56-7-105 and 56-8-104. Likewise, in Johnson v Farmers,  205 S.W. 2d 365 (2006), the Supreme Court of Tennessee ruled that where an insurer has exclusive control over the investigation and settlement of a claim, it may be held liable for an excess judgment where as a result of bad faith it fails to effect a settlement with policy limits. The court defined bad faith as a disregard of or demonstrable indifference toward the interests of the insured. See also, Williamson v. Aetna Life Inc. Co. 481 F. 3d 369 (2007), citing TCA Section 56-7-105 (plaintiff arguing bad faith must demonstrate the existence of a policy, must provide a formal demand for payment, the plaintiff waited sixty (60) days before filing suit, and the insurer refused payment and the same was not in good faith); Cracker Barrell Old County Store, Inc. v. Cincinnati Insurance Company, 590 F. Supp. 970 (2008) (while Tennessee does not recognize a common law tort for bad faith by an insurer against an insured, this is provided in TCA Section 56-7-105.); and Springer v Cumberland Cty. 2017 Lexis 512 (2017) (bad faith in the insurance and workers’ compensation environments requires a level of knowledge or indifference that amounts to wrongful conduct.)

Tennessee does not recognize third party bad faith claims.

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Chartwell Law represents the interests of insurers and employers, as such, we continue to continue to monitor the legal landscape. If you have any questions about issues associated with right of action for bad faith claims, our attorneys are available to help. Please contact your Chartwell Law attorney.