USAA total-loss settlements in Tennessee: how to negotiate a fair offer

Tennessee regulates first-party automobile total losses through three layered authorities: the substantive auto-claim settlement standards in the regulation at Tenn. Comp. R. & Regs. 0780-01-05-.09, the Unfair Claims Practice statute at Tenn. Code Ann. § 56-8-105 (which provides the regulatory authority but no private right of action), and the bad-faith refusal-to-pay penalty at Tenn. Code Ann. § 56-7-105 (whose applicability to automobile insurance policies is contested — see below). Tennessee does not impose a separate licensing requirement on a policyholder's appraiser invoked under the policy's appraisal clause. Tenn. Code Ann. § 56-8-105 — Unfair Claims Practice. Section 56-8-105 is the statutory list of unfair claim settlement practices, including: misrepresenting pertinent facts or insurance policy provisions; failing to acknowledge and act with reasonable promptness on claim communications; failing to adopt and implement reasonable standards for the prompt investigation of claims; refusing to pay claims without conducting a reasonable investigation; failing to affirm or deny coverage within a reasonable time after proof-of-loss requirements are completed; not attempting in good faith to effectuate prompt, fair, and equitable settlement when liability is reasonably clear; and compelling insureds to institute litigation to recover amounts due. (Tenn. Code Ann. § 56-8-104, by contrast, is captioned "Unfair trade practices defined" and addresses misrepresentation of policy benefits, false advertising, defamation, boycott/coercion, etc. — not claim-handling.) Tenn. Comp. R. & Regs. 0780-01-05-.09 — Standards for Prompt, Fair, and Equitable Settlements Applicable to Automobile Insurance. The substantive auto-total-loss settlement standards live in this regulation, promulgated under the authority of Tenn. Code Ann. §§ 56-2-301, 56-8-101 through 56-8-120, 56-8-105, 56-8-108, and 56-8-110. The rule requires insurers handling first-party automobile total-loss claims to settle on a method producing a reasonable approximation of the vehicle's actual cash value at the time of loss based on the local market value of comparable vehicles of like kind and quality; the settlement amount must include applicable taxes, license fees, and other transfer fees; and condition deductions must be itemized and supported by inspection-based documentation. Critically, Tenn. Comp. R. & Regs. 0780-01-05-.01 expressly provides that "Nothing herein shall be construed either to create or to imply a private cause of action for violation of this Chapter" — regulatory violations are evidence supporting other causes of action (e.g., bad-faith refusal) but do not themselves create a private suit. Tenn. Code Ann. § 56-7-105 — Bad-Faith Refusal to Pay Insurance Claims. When an insurer refuses to pay a loss within sixty (60) days after a written demand by the policyholder, and the court or jury finds that the refusal was not in good faith and that the failure inflicted additional expense, loss, or injury, the insurer is liable for the loss plus interest plus a sum not exceeding twenty-five percent (25%) of the liability for the loss. CRITICAL APPLICABILITY CAVEAT: Tennessee appellate authority holds that § 56-7-105 does NOT apply to automobile insurance policies. The controlling line is Tenn. Farmers Mut. Ins. Co. v. Cherry, 374 S.W.2d 371, 372 (Tenn. 1964) ("this type of insurance contract [auto liability] would not bear interest prior to any judgment secured thereon"); Medley v. Cimmaron Ins. Co., 514 S.W.2d 426, 428 (Tenn. 1974) (auto liability not subject to the bad-faith penalty statute); and Shannon Giles v. Geico Gen. Ins. Co., No. M2021-00165-COA-R3-CV (Tenn. Ct. App. Oct. 28, 2021), which expressly reaffirmed that § 56-7-105 is inapplicable to automobile insurance policies. For Senior Help, LLC v. Westchester Fire Ins. Co., 515 F. Supp. 3d 787, 800 (M.D. Tenn. 2021), states the doctrine: § 56-7-105 applies only to written contracts that themselves bear interest from the time they become due. Whether collision/comprehensive first-party physical-damage coverages might fall outside Cherry's rationale is an unresolved question that no Tennessee appellate court has squarely addressed. Tenn. Code Ann. § 55-3-211 — Salvage Title Threshold. A salvage vehicle in Tennessee is a passenger motor vehicle for which the total estimated or actual cost of parts and labor to rebuild or reconstruct the vehicle to its pre-accident condition and for legal operation on roads or highways exceeds 75% of the retail value of the vehicle. The 75% threshold sets the operational total-loss decision point; the statutory reference value is retail value, not actual cash value. Tennessee does not impose a separate licensing requirement on a policyholder's appraiser invoked under the policy's appraisal clause.