3.1 Tennessee Auto Insurance Requirements
Key Takeaways
- Tennessee's current minimum liability is 25/50/25 - property damage rose from $15,000 to $25,000 for policies issued or renewed after December 31, 2022 (SB504)
- Tennessee is a fault (tort) state using modified comparative fault under the 49% rule - you recover only if you are 49% or less at fault
- Insurers must offer uninsured/underinsured motorist (UM/UIM) coverage at limits equal to liability; the insured may reject only in writing
- The James Lee Atwood Jr. Law (Financial Responsibility Law) drives electronic insurance verification and registration suspension for uninsured vehicles
- An SR-22 certificate proves financial responsibility and is typically required for 3 years after DUI, no-insurance, or similar violations
Tennessee Minimum Liability Requirements
Tennessee enforces auto coverage through its Financial Responsibility Law (Tennessee Code Annotated Title 55, Chapter 12). A producer must quote and verify the current minimum limits, because Tennessee changed them recently and the old "25/50/15" shorthand is now wrong.
Senate Bill 504, enacted in 2021-2022, raised the property damage (PD) minimum from $15,000 to $25,000 for any split-limit policy issued or renewed after December 31, 2022. Bodily injury limits were unchanged. The current Tennessee minimum is therefore 25/50/25.
Current Minimum Limits (effective for 2023+ policies)
| Coverage | Minimum Limit | Shorthand |
|---|---|---|
| Bodily Injury (BI) per person | $25,000 | 25 |
| Bodily Injury per accident | $50,000 | 50 |
| Property Damage per accident | $25,000 | 25 |
Exam trap: Older study materials say 25/50/15. If a question references a policy renewed in 2023 or later, the PD floor is $25,000. Read the question's date carefully.
Worked example. A Tennessee insured with bare 25/50/25 limits causes an accident injuring two people ($30,000 and $18,000) and destroying a $40,000 vehicle. The insurer pays the per-person cap of $25,000 for the first claimant (not $30,000), $18,000 for the second (total BI of $43,000, under the $50,000 per-accident cap), and the PD cap of $25,000 toward the $40,000 vehicle. The insured personally owes the remaining $5,000 BI gap plus $15,000 PD gap = $20,000 out of pocket.
Fault (Tort) System and the 49% Rule
Tennessee is a fault (tort) state - the at-fault driver's insurer pays. It is not a no-fault state and has no mandatory PIP; sources claiming Tennessee mandates personal injury protection are wrong. Tennessee applies modified comparative fault under the McIntyre v. Balentine (1992) 49% rule:
- A claimant 49% or less at fault recovers damages, reduced by their fault percentage.
- A claimant 50% or more at fault recovers nothing (the bar).
| Your fault % | Damages | Recovery |
|---|---|---|
| 0% | $20,000 | $20,000 |
| 30% | $20,000 | $14,000 |
| 49% | $20,000 | $10,200 |
| 50% | $20,000 | $0 (barred) |
Financial Responsibility and Verification
The James Lee Atwood Jr. Law powers Tennessee's electronic insurance verification program: insurers report active policies, and the state cross-checks vehicle registrations. Drivers must keep continuous liability coverage and present proof on demand.
| Violation | Typical penalty |
|---|---|
| First offense (no insurance) | Up to $300 fine; registration/plate suspension; reinstatement fee |
| Repeat / uncorrected | Class A misdemeanor exposure; longer suspension; higher fees |
| Failure to respond to verification notice | Registration suspended until proof or coverage filed |
A producer should counsel clients that a coverage lapse - even one day between policies - can trigger a verification notice and suspension, and that reinstatement requires paying a fee and sometimes filing an SR-22.
Uninsured and Underinsured Motorist Coverage
Tennessee law requires insurers to offer uninsured/underinsured motorist (UM/UIM) coverage at limits equal to the policy's liability limits. The insured does not automatically get UM/UIM only if they affirmatively decline it.
The Written-Rejection Rule
| Requirement | Detail |
|---|---|
| Offer | Mandatory at limits equal to liability |
| Rejection | Must be in writing and signed by the named insured |
| Default if no rejection | UM/UIM is included at liability-equal limits |
| Lower limits | Insured may also select UM/UIM below liability limits in writing |
Exam tip: If the insured never signs a rejection, assume UM/UIM applies at the same limit as liability. A producer who fails to obtain the signed form exposes the insurer to a UM/UIM claim it never charged premium for - a classic errors-and-omissions scenario.
What UM vs. UIM Covers
- Uninsured Motorist (UM): at-fault driver has no liability insurance, is a hit-and-run (phantom vehicle), or whose insurer is insolvent.
- Underinsured Motorist (UIM): at-fault driver has insurance, but their limits are less than the injured party's damages. Tennessee UIM is "gap" excess - it pays the difference above the tortfeasor's limits up to your UIM limit.
UIM worked example. Your UIM limit is $100,000. The at-fault driver carries only 25/50/25 and you suffer $80,000 in bodily injury. You collect $25,000 from the at-fault driver, then UIM pays the $55,000 gap (your $80,000 damages minus the $25,000 already paid) - not the full $100,000.
SR-22 Certificates
An SR-22 is not insurance; it is a certificate of financial responsibility the insurer files with the Tennessee Department of Safety and Homeland Security confirming the driver carries at least minimum liability.
| Triggering event | Typical SR-22 period |
|---|---|
| DUI / DWI conviction | 3 years |
| Driving without insurance | 3 years |
| At-fault accident while uninsured | 3 years |
| Multiple serious violations | 3 years |
Key rules a producer must explain:
- The insurer files the SR-22 electronically; the driver cannot file it directly.
- Coverage must stay continuous for the full term - any lapse triggers an SR-26 cancellation notice to the state and license suspension.
- Premiums are typically surcharged during the SR-22 period because the driver is high-risk.
- A non-resident who needs to drive in Tennessee may need a non-owner SR-22 if they do not own a vehicle.
A Tennessee auto policy is renewed in March 2026 at state-minimum limits. What property damage limit must it carry?
Under Tennessee's modified comparative fault rule, a driver found 50% at fault in an accident can recover:
A Tennessee insured never signed a UM/UIM rejection form. What coverage applies?
Which statement about an SR-22 in Tennessee is correct?