Doubling the Stakes: Tennessee’s Proposed Increase to Noneconomic Damages Caps
By: Colton Adams, Associate - Meridian Law
Introduction
The Tennessee General Assembly is considering House Bill No. 5 (HB0005), which proposes substantially increasing statutory caps on noneconomic damages in private civil actions.
If enacted, this legislation will have major implications for insurers and defendants in Tennessee. It will increase potential recoveries for plaintiffs and alter current risk management strategies. Below, we provide an overview of the current law, the proposed changes, and their implications if passed.
Noneconomic Damages Caps in Private Civil Actions
Current Law
Under the existing Tenn. Code Ann. § 29-39-102, noneconomic damages in civil actions are subject to specific limitations. Noneconomic damages, which generally include compensation for pain and suffering, emotional distress, loss of consortium, and similar harms, are capped at $750,000 per injured plaintiff for all injuries and occurrences, regardless of the number of defendants.
For injuries classified as catastrophic under Tenn. Code Ann. § 29-39-102(d), the cap increases to $1,000,000. Catastrophic injuries include conditions such as spinal cord injuries resulting in paralysis, amputations, or the wrongful death of a parent with minor children.
The law also provides exceptions where these caps do not apply, such as cases involving intent to cause specific harm, intoxicated defendants, and certain egregious acts (e.g., falsifying evidence or conduct resulting in a felony conviction). See Tenn. Code Ann. § 29-39-102(h). Additionally, these specific caps do not apply to claims involving state or local governments, which are instead subject to the Tennessee Claims Commission Act or the Governmental Tort Liability Act, both of which impose their own limits on recoverable damages.
Proposed Changes Under HB0005
HB0005, introduced by State Representative Gino Bulso (R-Williamson County), seeks to amend Tenn. Code Ann. § 29-39-102 by doubling the existing statutory caps on noneconomic damages as follows:
Standard Cap: Increased from $750,000 to $1,500,000 per injured plaintiff.
Catastrophic Injury Cap: Increased from $1,000,000 to $2,000,000 per injured plaintiff if injuries are deemed catastrophic in nature.
Neither the current law nor the proposed bill establishes new causes of action or modifies the exceptions to the existing caps. Instead, they raise the potential recoveries available to plaintiffs in cases involving severe injuries or wrongful death. If passed, these changes would apply prospectively to claims arising on or after July 1, 2025.
Implications for Insurers and Defendants
By doubling the potential recoveries for noneconomic damages, HB0005 would dramatically increase the financial exposure faced by defendants in civil actions, particularly in cases involving severe injuries or wrongful death.
Key areas of impact
Increased Liability Exposure. An increased cap on noneconomic damages would result in heightened liability exposure. Claims involving catastrophic injuries or wrongful death, which may have previously fallen within existing limits, could now exceed those thresholds. This is especially relevant in multiple claimant cases, where aggregated noneconomic damages could increase dramatically. Defendants facing allegations of negligence in motor vehicle accidents or premises liability cases, where injuries are often severe, may be exposed to higher verdicts and settlements.
Higher Settlement Values; Potential Litigation Costs. The higher limits on recoveries will likely increase average settlement values across a broad range of civil cases, as parties use the new caps as leverage in negotiations. Although HB00005 would not create new causes of action, the prospect of higher recoveries may incentivize some plaintiffs to file lawsuits rather than accept pre-litigation settlements. This could lead to longer claims cycles and increased litigation costs. Insureds should strongly consider increasing their insurance limits to at least $2,000,000 or having a minimum of $1,000,000 in coverage and purchasing a $1,000,000 umbrella policy. Otherwise, there will be an increase in excess verdicts against underinsured defendants.
Impact on Litigation Reserves and Premiums. The financial ramifications of these changes are particularly significant for insurers and insured parties. If this legislation passes, insurers must reevaluate claims reserves to account for the more significant potential payouts. Reserve practices will likely need to be adjusted to reflect the increased exposure, especially for high-severity claims. Furthermore, insurers may also need to reassess premium structures, particularly for policies issued in high-risk sectors such as transportation, construction, or retail. Businesses in these industries could see a rise in insurance costs as carriers attempt to mitigate their own heightened risk under the new framework.
Long-Term Strategic Adjustments. Beyond the more immediate financial implications if passed, HB0005 may also influence long-term claims strategies. Insurers may be compelled to explore alternative dispute resolution approaches more aggressively to avoid the unpredictability of jury verdicts under the expanded caps. Similarly, insured parties may face greater pressure to implement more risk management protocols to minimize the likelihood of catastrophic events that could result in substantial noneconomic damages claims.
Ultimately, if HB0005 is enacted, the higher caps will require careful planning and strategic adjustments across the claims management and litigation process to mitigate the potential impact of this legislation.
Conclusion
If enacted, HB0005 will significantly reshape the liability environment in Tennessee by doubling the statutory caps on noneconomic damages. While the bill preserves current exceptions and exclusions, the increased limits will heighten the financial exposure of private parties.
At Meridian Law, we closely monitor the progress of HB0005, and other legislation, as it moves through the legislative process. Please contact our office if you have questions about how this proposed legislation could impact your business or require assistance preparing for these changes. We’re here to help you navigate the evolving legal environment.
You can also find more information about HB0005 at:
*Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Meridian Law, PLLC, or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.