Best Small Business Insurance in Tennessee

Tennessee Insurance Requirements

Tennessee law currently mandates that businesses with five or more employees must carry workers’ compensation insurance and that business vehicles must be covered by commercial auto insurance.

Commercial Auto Insurance

Tennessee mandates automotive liability insurance for motor vehicles but does so in a rather roundabout way. State law requires anyone applying for a driver’s license to sign a declaration that they will follow Tennessee’s Financial Responsibility Law. Compliance with the law may be shown by having auto insurance that provides either a minimum of $65,000 per accident or 25-50-15 coverage. 

Drivers’ licenses and related matters administered by DMVs in other states fall under the Driver Services Division of Tennessee’s Department of Safety & Homeland Security. 

55-12-138: Certification of Understanding of and Compliance with Financial Responsibility Law

The commissioner of safety, with each application for an operator's or chauffeur's license, shall include a brief summary of the state's financial responsibility law and the summary shall contain the following or similar certification to be signed by the applicant: “I CERTIFY THAT I UNDERSTAND ABOUT TENNESSEE'S FINANCIAL RESPONSIBILITY LAW AND I AGREE TO ABIDE BY IT.”

55-12-120: Certificate of Insurance as Proof of Financial Responsibility

Proof of financial responsibility may be furnished by filing with the commissioner the written certificate of any insurance carrier duly authorized to do business in this state, certifying that there is in effect a motor vehicle liability policy for the benefit of the person required to furnish proof of financial responsibility.

55-12-102: Part Definitions

(12)(i) Proof means… A written proof of liability insurance coverage provided by a single limit policy with a limit of not less than sixty-five thousand dollars ($65,000) applicable to one (1) accident;

A split-limit policy with a limit of not less than twenty-five thousand dollars ($25,000) for bodily injury to or death of one (1) person, not less than fifty thousand dollars ($50,000) for bodily injury to or death of two (2) or more persons in any one (1) accident, and not less than fifteen thousand dollars ($15,000) for damage to property in any one (1) accident.

Workers’ Compensation Insurance

In Tennessee, any employer with five or more workers, whether they be full or part-time, must carry workers' compensation insurance. The construction and mining industries have stricter requirements. An employer must provide coverage even if there is one employee. 

50-6-103: Scope of Chapter

Every employer and employee … shall, respectively, pay and accept compensation for personal injury or death by accident arising primarily out of and in the course and scope of employment without regard to fault as a cause of the injury or death.

An employer has an obligation to pay compensation, and the obligation to pay compensation may be satisfied by carrying workers’ comp insurance.

50-6-405: Compensation Insurance or Proof of Financial Ability Required

(a)(1) Every employer… shall insure and keep insured the employer's liability… in some person or persons, association, organization or corporation authorized to transact the business of workers' compensation insurance in this state.

50-6-102: Definitions

“Employer” includes any individual, firm, association or corporation, the receiver or trustee of the individual, firm, association or corporation, or the legal representative of a deceased employer, using the services of not less than five (5) persons for pay… and, in the case of an employer engaged in the mining and production of coal, one (1) employee for pay.

50-6-902: Requirement That Construction Services Providers Carry Workers' Compensation Insurance

(a) All construction services providers shall be required to carry workers' compensation insurance on themselves. The requirement … shall apply whether or not the provider employs fewer than five (5) employees.

Data Breach Insurance

Tennessee enacted its data breach notification law in 2005. The law, which has been twice amended to broaden scope, imposes a duty on a business to inform a resident if their personal information may have been or has been accessed without authority. Here are the relevant parts of the Tennessee Code:

Release of Personal Consumer Information

“Following discovery or notification of a breach of system security by an information holder, the information holder shall disclose the breach of system security to any resident of this state whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person…”
TN Code § 47-18-2107(b) (2021)

Information Holder

‘“Information holder” means any person or business that conducts business in this state, or any agency of this state or any of its political subdivisions, that owns or licenses computerized personal information of residents of this state…”
TN Code § 47-18-2107(a)(3) (2021)

The duty to inform an individual whose personal information has been compromised may move that individual to seek redress by filing a legal complaint. Such actions can be costly for a business, especially where many individuals have been affected. But Tennessee businesses can mitigate this risk by carrying data breach insurance. 

Tennessee Insurance Resources

Tennessee Driver Services
Why You Should Have Auto Insurance
Tennessee Workers’ Compensation for Employers
Tennessee Business Services Online

General Liability Insurance

The vast majority of Tennessee companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

Tennessee requires businesses with five or more employees to carry workers’ compensation insurance. For businesses in the construction and mining industries, the obligation to carry workers’ comp is one employee.

 Nevertheless, it’s a good idea to subscribe to such insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate Tennessee insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.