Tennessee just tightened auto insurance from two sides – new coverage rules for delivery-app drivers, and far steeper penalties for going uninsured.
In May 2026, Governor Bill Lee signed two laws that reshape auto coverage in the state. One builds an insurance framework for gig delivery. The other rewrites the penalties for driving uninsured and, in narrow cases, limits what a repeat-uninsured driver can recover after a crash.
The first, Public Chapter 1011, sets liability requirements for delivery network companies, or DNCs – the app-based platforms that connect customers with drivers delivering goods in their own cars. Starting January 1, 2027, those companies and their drivers must carry coverage while drivers are working.
The law splits working time into two windows. The delivery availability period covers a driver logged in and waiting but carrying nothing. The delivery service period runs from heading out for a pickup through the final drop-off. During both, the driver, the company, or a mix must keep liability coverage of at least $50,000 for bodily injury to one person, $100,000 for everyone hurt in a crash, and $25,000 for property damage.
Claims teams will want to mark the fallback rule. If a driver's coverage lapses or comes up short, the company's insurance has to step in from the first dollar of a claim, and the company's insurer has to defend it. Company coverage cannot be made to wait for another insurer to deny first.
The same law gives personal auto insurers a clean exit. A Tennessee insurer may exclude all coverage and any duty to defend or indemnify for a loss that happens during the delivery availability period and the delivery service period, reaching liability, uninsured and underinsured motorist, medical payments, comprehensive, and collision coverage. Existing business-use and delivery exclusions stay valid, as do underwriting and nonrenewal rights. A personal insurer that ends up paying an excluded claim can seek recovery from the DNC's insurer. And if there's a dispute over when a delivery period began or ended and the company can't produce the timing records, the DNC's insurer takes primary liability. DNCs must also tell drivers in writing, before they start, what coverage the company provides and that the driver's own policy may not cover the delivery periods.
The second law, Public Chapter 1077, targets uninsured driving, and the numbers are steep. The basic coverage-failure fee climbs from $25 to $500. A continued-failure fee jumps from $100 to $1,000. A driver who gets a repeat notice within three years faces a $1,500 repeated coverage-failure fee plus suspension or revocation of the vehicle's registration. The law sets out how each fee is split among the county clerk, the department of safety, and a state uninsured-motorist fund.
It also reaches into the courtroom. A new provision caps noneconomic damages at $375,000, but only for a plaintiff who owned or leased the vehicle in the crash, whose vehicle was not in compliance with financial-responsibility requirements at the time, and who had received at least three separate written noncompliance notices in the prior three years. If a catastrophic loss or injury exists, the cap rises to $750,000. It does not apply to passengers, to permitted drivers who don't own or lease the vehicle, or to certain other plaintiffs. A defendant must plead the cap as an affirmative defense and prove every prerequisite, and the provision must be strictly construed.
On data, the law requires each auto liability insurer to use the IICMVA model and to give the department of revenue a full book of business each week, including each vehicle's identification number, the insurer's NAIC code, policy number, and effective date. And between January 1, 2027, and December 31, 2028, the department will issue a data call every six months for aggregated data on auto policies cancelled within 60 days of issuance, either at the policyholder's request or for nonpayment.
Chapter 1011 takes effect January 1, 2027. In Chapter 1077, the fee increases and damages cap take effect July 1, 2027, while the insurer-reporting changes took effect on signing.
