Insurance Companies, Agents, Brokers, Policies

Plain English Breakdown

The official source does not provide information on why the changes are being made.

Increasing Retained Risk Limit for County Mutual Insurance Companies

This bill changes Tennessee law to raise the retained risk limit from $100,000 to $250,000 for single risks covered by county mutual insurance companies.

What This Bill Does

• Changes the retained risk limit from $100,000 to $250,000 for a single risk covered by policies issued by county mutual insurance companies.

Who It Names or Affects

• County mutual insurance companies in Tennessee
• People and businesses who buy insurance from these companies

Terms To Know

Certificate of Authority

A document given by the state that allows a company to sell insurance.

Retained Risk

The amount of risk an insurance company keeps for itself instead of passing it on to another insurer.

Limits and Unknowns

• Does not change other parts of the law about how county mutual insurance companies operate.
• Only affects policies issued after July 1, 2026.
• The bill does not explain why these changes are being made.

Official Summary Text

T
he Tennessee
County Mutual Insurance Company Act of 2006

governs the qualifications and procedures for licensing and general regulatory requirements for county mutual insurance companies insuring risks and property in this state.
The Act provides that i
t is unlawful for any person to enter into a contract of insurance as a county mutual insurance company or transact insurance business in this state as a county mutual insurance company without a certificate of authority provided by the commissioner
of commerce and insur
ance.

The Act provides that such a
certificate of authority authorize
s
the county mutual insurance company to insure losses or damage to property, including losses of use and occupancy, by fire, lightning, explosion, windstorm, hail, riot, civil commotion, aircraft, vehicles, collision, extended only to farm machinery, live
stock, and other covered farm property, overturn of farm equipment, smoke, glass breakage, theft, vandalism, falling objects, weight of
ice, snow or sleet, freezing, sudden and accidental dama
ges caused by discharge or failure of plumbing, heating, air conditioning or automatic sprinkler systems, sudden and accidental tearing apart, cracking, burning or bulging of plumbing, heating, air conditioning or automatic sprinkler systems, sudden and a
ccidental jolts from artificially generated electrical currents to electrical appliances, devices, fixtures and wiring, electrocution, drowning, vicious animals, sinkhole, collapse and volcanic action.

However, the Act prohibits a
certificate of authority
from
authoriz
ing
a county mutual insurance company to issue a policy of insurance covering those risks
described above
where the retained amount of risk by the county mutual insurance company on any single risk exceeds the lesser of
(i)
$20,000, plus 3% of the county mutual insurance company's surplus or

(
ii
) $100,000.
This bill raises the $100,000 limit in this provision to $250,000.

The Act prohibits any
county mutual insurance company meeting the requirements of
the Act from
issu
ing
a policy of insurance covering those risks found in
the Act
where the retained amount of risk by the county mutual insurance company on any single risk exceeds $100,000 liability and $5,000 medical payments.
This bill raises the $100,000 liability limit in this provision to $250,000.

Current Bill Text

SENATE BILL 2601
By Southerland

HOUSE BILL 1826
By Eldridge
HB1826
009846
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 56,
Chapter 22, relative to county mutual insurance
companies.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 56-22-106(c)(1)(B), is amended by
deleting "One hundred thousand dollars ($100,000)" and substituting "Two hundred fifty
thousand dollars ($250,000)".
SECTION 2. Tennessee Code Annotated, Section 56-22-106(c)(2), is amended by
deleting "one hundred thousand dollars ($100,000)" and substituting "two hundred fifty thousand
dollars ($250,000)".
SECTION 3. This act takes effect July 1, 2026, the public welfare requiring it.