States , Tennessee

Tennessee General Liability Insurance: Key Facts for Owners

November 7, 2025

Whether you’re a plumber in Knoxville, a restaurant owner in Nashville, or managing an event venue in Chattanooga, general liability insurance in Tennessee provides valuable protection. While it isn’t required by state law for all businesses, many contracts, leases, and licenses demand it—and without coverage, one lawsuit could put your business at risk.

This guide covers who needs coverage, what it protects, costs and coverage factors, and what to do if you need to file a claim.

Who Needs General Liability Insurance in Tennessee?

Tennessee does not mandate general liability insurance statewide for most businesses. However, several industries and licensing requirements enforce their own rules.

You’ll likely need coverage if:

You’re a contractor: Tennessee requires general liability insurance for contractor licensing. State law mandates minimum $100,000 coverage as required by the Tennessee Board for Licensing Contractors under the Department of Commerce and Insurance.Contractor licensing monetary limits are based on ten times the lesser of working capital or net worth, with minimum general liability insurance of $100,000 required for licensing
You own a shop or restaurant: High foot traffic increases slip-and-fall risk. Restaurant insurance commonly includes general liability coverage.
You run a farm or event site: Agricultural operations and festivals may require coverage depending on permits and local requirements.
You’re a healthcare operator: General liability insurance covers non-treatment injuries, like someone falling in a waiting room.
You’re a freelancer or sole proprietor: Even if exempt from mandates, your clients may require proof of small business liability coverage before signing a contract.

In most cities, commercial landlords and government contractors won’t work with uninsured businesses.

What General Liability Covers

General liability insurance Tennessee businesses carry typically includes:

Bodily Injury: Pays for medical care if a customer gets injured—like a slip at your boutique.
Property Damage: Covers costs if you accidentally damage a client’s property while on the job.
Products & Completed Operations: Useful for contractors or manufacturers—covers injuries or damage after a project is done or a product is sold.
Personal and Advertising Injury: Protects against libel, slander, or advertising-related lawsuits.
Medical Payments: Pays for minor injuries without needing court involvement.
Legal Defense: Covers attorney costs, even if the case gets dismissed.

Tennessee follows modified comparative negligence laws with a 50% rule—if you’re found 50% or more at fault, you can’t recover damages. This increases the importance of having strong general liability coverage.

Common Risk Scenarios in Tennessee

Claims occur in various industries. Here are some examples that show why coverage matters:

Slip-and-Fall Incidents: A customer slips on a wet floor at your Nashville café
Contractor Property Damage: A contractor’s mistake damages property at a client location
Restaurant Food-Related Claims: Contaminated food from a restaurant causes illness

Whether you run a boutique, food truck, or home service business, liability insurance can help protect against potential damages and legal costs.

Businesses often confuse general liability and workers’ comp. This guide on general liability vs. workers’ compensation explains the key differences and how both coverages work together to protect your company.

General Liability Insurance Costs and Coverage Factors

Rates vary by size, location, and business type. Several key factors affect premiums:

Key Cost Factors Include:

Industry Risk Level: Different industries carry different risk profiles (e.g., roofing vs. marketing)

Location: Urban zones may have different risk assessments than rural areas

Claims History: Previous claims can affect your premiums

Deductible: Lower deductibles typically result in higher premiums

Bundling: Combining general liability with other policies like business owner’s policies (BOPs) may provide cost savings

Coverage Considerations

When determining appropriate coverage, consider:

Contractual requirements from clients or landlords
Industry-specific risks and exposure levels
State and local regulatory requirements
Asset protection needs

Claims Process & Legal Notes

If an incident occurs, you’ll need to:

Notify your insurer according to your policy requirements
Submit documentation (photos, reports, witness info)
Cooperate with investigation (process varies by claim type)
Work with your insurer to resolve the claim

Important Legal Information:

Tennessee has a 1-year statute of limitations for personal injury lawsuits – This is much shorter than most states, per Tennessee Code § 28-3-104.

Insurance claims must be reported according to your policy terms (typically within specified timeframes)

Workers' Compensation Requirements

Tennessee requires businesses with five or more employees (full-time or part-time) to carry workers’ compensation insurance. Additionally, all businesses in construction or coal mining must carry workers’ comp regardless of employee count.

Final Takeaway

Operating without general liability insurance in Tennessee is risky—especially for contractors who are legally required to carry it. Don’t wait until a claim puts your assets or contracts at risk.

Here’s what to do now: