Tennessee

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.