How Uninsured Motorist Coverage Works in Tennessee

Uninsured motorist coverage in Tennessee is built into every auto insurance policy sold in the state unless you sign a written rejection, and it pays your medical bills, lost wages, pain and suffering, and vehicle damage when the driver who hit you either has no insurance or not enough of it. Your own insurer effectively steps into the shoes of the at-fault driver’s insurer. The coverage has real limits and a few traps, so it’s worth knowing how it works before you need it.

How UM Coverage Ends Up on Your Policy

Every auto liability policy issued or renewed in Tennessee must include UM coverage by default. An insurer can leave it off only if you, the named insured, sign a written rejection. You can also choose lower limits, but those limits cannot drop below the state’s statutory minimums.¹

A signed rejection binds everyone the policy covers, not just the person who signed. But the reverse also protects you: if your insurer never obtained a valid written rejection, the law presumes UM coverage is part of your policy. The insurer cannot later deny a claim by pointing to a declarations page that doesn’t list UM. If you’re unsure, check your paperwork for a signed rejection form. If none exists, you almost certainly have coverage.¹

What UM Coverage Pays For

Bodily Injury

Uninsured motorist bodily injury (UMBI) coverage pays for hospital bills, surgery, rehabilitation, lost wages while you recover, and pain and suffering after a crash with an uninsured or underinsured driver. It covers you, family members listed on the policy, and passengers in your vehicle.

Property Damage

Property damage coverage is separate. Your insurer must offer UM property damage (UMPD) when you buy UMBI, but you can decline it in writing. Once you’ve rejected UMPD, the insurer doesn’t have to offer it again at renewal unless you submit a new application or a written request.¹

UMPD carries a built-in $200 deductible, but the deductible disappears when both conditions are met: your vehicle is insured for collision and UMPD with the same insurer, and the other driver has been identified and is entirely at fault. Property damage under this statute means damage to your insured vehicle or personal property inside it at the time of the accident.¹

Minimum Coverage Limits

Tennessee’s minimum UM limits mirror the state’s financial responsibility minimums:

$25,000 per person for bodily injury
$50,000 per accident for bodily injury
$25,000 per accident for property damage

You can buy higher limits but not lower ones.² When multiple people are hurt in the same crash, the per-accident cap is the total your insurer will pay across all claims combined. A $50,000 per-accident limit shared among three injured passengers means each person’s share is squeezed by what the others recover.

No Stacking Across Vehicles

If you insure more than one vehicle, you cannot combine the UM limits from each into a larger pool. The statute says UM limits “shall not be increased because of multiple motor vehicles whether covered under a single policy or multiple policies.” Only the UM limits on the vehicle you were occupying at the time of the accident apply as primary coverage.¹

There is a priority system when several policies cover you. UM on the vehicle you were riding in pays first. If exhausted, a policy where you’re a named insured pays next as excess. If exhausted, any other policy listing you can apply. But the total from all sources combined can never exceed the highest single UM limit you carry.¹

Underinsured Motorist Claims and the Offset

Tennessee treats underinsured motorist (UIM) claims under the same statute as uninsured claims. A driver is underinsured when their liability limits are too low to cover your full damages. Your UM policy fills the gap, but not by stacking on top.

Tennessee uses an offset. Your insurer’s maximum liability equals your UM limit minus whatever you already collected from the at-fault driver’s liability policy. If your damages total $90,000, the at-fault driver’s insurer pays its $25,000 limit, and your $100,000 UM policy owes up to $75,000. Carrying UM limits only slightly above the state minimum won’t help much in a UIM claim, because the offset erases most of the benefit.¹

Hit-and-Run Crashes

UM coverage applies when the at-fault driver is never identified, but Tennessee imposes extra requirements. You must satisfy at least one of two tests:

Physical contact between the unknown driver’s vehicle and your person or property, or
The existence of the unknown driver established by clear and convincing evidence from a source other than occupants of your vehicle.

You also must have reported the accident to law enforcement within a reasonable time, and you must not have been negligent in failing to identify the other vehicle or driver.¹

The corroboration path is harder than it sounds. A witness who saw the other car run the red light, surveillance footage, or paint transfer on a guardrail can satisfy it. Your own passengers’ testimony alone will not. Call the police immediately, photograph everything, and try to get contact information from bystanders who saw what happened.

How Comparative Fault Cuts Your Payout

Tennessee uses modified comparative fault. If you were partly responsible for the crash, your recovery is reduced by your percentage of fault. Damages of $80,000 with 20% fault on you means a $64,000 recovery.

If your share of fault reaches 50% or more, you recover nothing. That threshold applies to UM claims the same way it applies to any other personal injury claim, so your insurer will scrutinize the circumstances closely.³

Filing a UM Claim

Start collecting evidence at the scene. Photograph vehicle damage, skid marks, road conditions, and any visible injuries. Get the police report number and witness contact information. Tennessee requires a written accident report filed with the Department of Safety within 20 days when a crash involves any injury, death, or property damage above $1,500.⁴

Notify your own insurer as soon as possible. Most policies require notice within 30 to 60 days, and missing that window gives the insurer grounds to deny your claim. Once you file, the insurer will investigate medical records, repair estimates, the police report, and your statements. Keep copies of everything: medical bills, prescription receipts, missed-work documentation, and every letter or email with the insurer.

Deadlines That Can Kill Your Claim

Tennessee’s statute of limitations for personal injury actions is one year from the date of the accident. If you plan to sue the at-fault uninsured driver directly, that clock is unforgiving.⁵ A UM claim against your own insurer is generally treated as a contract action and carries a longer limitations period. Don’t rely on that gap. Policy notice requirements and investigation needs make early action essential regardless of which deadline technically applies.

Common Exclusions

Not every crash triggers UM benefits. A vehicle owned by the policyholder or furnished for regular use by the policyholder, a resident spouse, or a resident relative does not qualify as an “uninsured motor vehicle” under the statute. If you own a second car without insurance on it, and someone driving that car injures you, your UM coverage on your other vehicle will not treat it as an uninsured-motorist situation.⁶

Government vehicles get separate treatment. The statute treats the liability limits that apply to a government entity as if they were coverage under a valid insurance policy. A city bus or state trooper’s patrol car that hits you isn’t uninsured for UM purposes because the government’s liability exposure counts as available coverage.⁶

Intentional acts like staged accidents will void coverage. Individual policies may add exclusions, so read the declarations page and exclusions section before you need them.

What to Do If Your Claim Is Denied

Ask the insurer for a written explanation. If you believe the denial is improper, you can file a complaint with the Tennessee Department of Commerce and Insurance, which investigates unfair claims practices.

The stronger tool for individual policyholders is Tennessee’s bad faith statute. If an insurer refuses to pay a valid claim within 60 days of your demand and a court finds the refusal was not in good faith, you can recover the claim amount plus a penalty of up to 25% of the claim. The penalty is meant to cover the extra expense and harm caused by the refusal, including attorney fees.⁷

Arbitration in UIM Disputes

Some UM and UIM claims end in binding arbitration rather than court. When you accept the at-fault driver’s liability limits as a settlement, you must notify your UIM carrier in writing. The carrier can then consent to the settlement and agree to binding arbitration, or decline and preserve its subrogation rights against the at-fault driver. Whether arbitration occurs depends on both the statute and your specific policy language, so review the contract before assuming you’ll have a jury trial.

Taxes and Health Insurance Liens After Settlement

Most of a UM settlement for a car accident is tax-free. Federal law excludes from gross income any damages received on account of personal physical injuries or physical sickness, whether paid through a verdict or a settlement.⁸ That covers medical expenses, pain and suffering tied to the injury, and related emotional distress.

The portion compensating for lost wages is generally taxable, and may be subject to Social Security and Medicare taxes. Emotional distress damages that don’t stem from a physical injury are also taxable, though this rarely comes up in a typical UM claim because the underlying harm is physical. If your settlement is large or includes a significant lost-wages component, get tax advice before you sign.

Winning a settlement doesn’t always mean you keep the full amount. If your health insurer paid for accident-related treatment, it may have subrogation or reimbursement rights written into the plan contract. The bite is sharpest when coverage comes through a self-funded employer plan governed by the federal ERISA statute; ERISA preempts state law, so Tennessee’s consumer-protection rules about subrogation may not apply. State-regulated plans (individual-market policies and small fully insured group plans) are more likely to fall under Tennessee’s rules, which tend to be friendlier to the injured person. Lien amounts are sometimes negotiable, but ignoring a valid lien is not an option. Address it before your settlement check arrives.

1
Justia. Tennessee Code 56-7-1201 – Requirements and Types of Coverage – Presumptions – Limitations of Liability
2
Tennessee Department of Revenue. Financial Responsibility Law
3
Justia. Tennessee Code 20-1-119 – Comparative Fault – Joinder of Third Party Defendants
4
Justia. Tennessee Code 55-10-107 – Written Report of Accident
5
Justia. Tennessee Code 28-3-104 – Personal Tort Actions
6
Justia. Tennessee Code 56-7-1202 – Uninsured Motor Vehicle Defined – Coverage of Government Vehicles
7
Justia. Tennessee Code 56-7-105 – Additional Liability Upon Insurers and Bonding Companies for Bad-Faith Failure to Pay Promptly
8
Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness