Tennessee Property Study Guide

Tennessee property law is defined as much by what the state has not activated as by what it regulates. There is no operating FAIR Plan and no wind pool — but there is an assigned-risk plan for auto, and there is standby machinery in Title 56 that most summaries miss. That asymmetry, plus the surplus-lines rules that fill the gap, is the spine of this part of the exam.

Rate regulation runs in two directions at once

Tennessee is routinely described as a “file-and-use” state. It is not — and the reason is that the state uses two different regimes depending on the risk.

• Personal risk (§56-5-105). File “at least thirty (30) days before the proposed effective date.” The filing is “deemed to meet the requirements of this part and to become effective unless disapproved by the commissioner before the expiration of the waiting period.” That is a deemer — the insurer waits.
• Commercial risk (§56-5-106). File “not later than fifteen (15) days after the effective date.” Use first, file second.

No operating FAIR Plan — but the statute books aren’t empty

Here is the fact most national prep gets wrong in one direction and most state summaries get wrong in the other. Tennessee has no operating FAIR Plan and no activated property insurer of last resort. A homeowner nobody will write goes to the surplus lines market, not to a state plan.

But “there is no statutory mechanism” is too strong. Title 56, chapter 41 authorises a voluntary risk-sharing or market-assistance plan where property and casualty insurance “is not readily available in the voluntary market” (§56-41-102), and lets the Commissioner, after public hearing, create the Tennessee Property and Casualty Insurance Association if that plan “has failed, or… no plan has been established” (§56-41-103). The machinery exists; nothing indicates it has been stood up.

Now the trap. Tennessee does operate a live residual mechanism for automobile: the Tennessee Automobile Insurance Plan, the assigned-risk plan administered by AIPSO under T.C.A. §55-12-136. Candidates who reason from the auto plan to a property plan invent one; candidates who reason from the quiet property machinery to auto delete one. Both halves get missed.

The perils are inland, not coastal

Tennessee is landlocked — no beach plan, no windstorm pool, nothing that looks like a coastal mechanism. Its catastrophe exposure runs three ways: tornado and severe thunderstorm across Middle Tennessee, hail and straight-line wind, and earthquake in West Tennessee from the New Madrid Seismic Zone. That last one is why earthquake endorsements are an ordinary part of a Memphis conversation and a rarity in Knoxville. Flooding sits alongside all three, excluded from the homeowners form as everywhere.

Credit scoring: permitted, but fenced

Tennessee permits credit-based insurance scoring, subject to §§56-5-201 to 56-5-207. The operative limit is §56-5-202: an insurer may not deny, cancel or non-renew personal insurance, or set renewal rates, “solely on the basis of credit information, without consideration of any other applicable underwriting factor independent of credit information.” Learn it as allowed-but-regulated: neither banned nor unrestricted.

Surplus lines — the credential is a filing, not a test

With no FAIR Plan behind you, surplus lines carries real weight in Tennessee, and the state makes the authority unusually easy to obtain. There is no surplus lines examination. You must already hold a current Tennessee producer licence, and the authority costs a $120 filing fee through NIPR.

The diligent-effort rule is where Tennessee genuinely differs, and it differs by having no number. T.C.A. §56-14-106 requires an affidavit that the agent “is, after diligent effort, unable to procure from an admitted company or admitted companies the full amount of insurance required to protect the interest of the insured.” That is a standard of conduct. Many states fix the search at three declinations; Tennessee never says three, or any other figure.

The surplus-lines calendar

Three dates and one rate:

• The affidavit is filed within 30 days of placing a new or renewal contract.
• Quarterly attestations are due 15 May, 15 August, 15 November and 15 February.
• Premium tax is 5% of gross premiums — and Tennessee has no stamping office, but filings run through the SLAS Clearinghouse, which TDCI’s filing procedures pair with a transaction fee of 0.175% of gross premium. So there is a second charge; it is just a small one.
• Placements for an exempt commercial purchaser need no diligent-search sworn statement at all.

One CE obligation that only property producers owe

A resident producer authorised to sell property insurance — or both property and casualty — must complete a one-time three-hour flood course under Tennessee rule 0780-01-56-.08(1)(c), meeting the federal minimum training requirements of section 207 of the Flood Insurance Federal Reform Act of 2004. The good news is that it counts inside your 24 hours of continuing education for one biennium rather than adding to them.