Final answer:
Liability for an insurance claim involving an unauthorized insurance company in Tennessee can fall upon the insurance company itself, the producer who sold the policy, or be covered by the state guaranty association to a limited extent. The Tennessee Department of Commerce & Insurance can provide assistance and policyholders may need legal counsel.
Step-by-step explanation:
When determining liability for an insurance claim on a policy sold by a Tennessee producer that is issued by an insurance company not authorized to operate in Tennessee, several factors come into play. In general, selling insurance without authorization in a state is illegal. When unauthorized insurers are involved, the state's department of insurance will typically step in to help protect policyholders and handle claims. However, the seller who sold the unauthorized insurance may also be held liable.
In some cases, if the insurance company is unable to fulfill its obligations, any existing state guaranty association may provide limited protection for policyholders. Tennessee, like other states, has a guaranty fund to help cover insured losses when a company is unauthorized and unable to pay. Liability may also fall upon the producer who sold the policy if it's proven that they knew, or should have known, that the insurance company was not authorized in Tennessee.
Policyholders should contact the Tennessee Department of Commerce & Insurance to report the issue and seek guidance on how to proceed with a claim. Additionally, they may need to consult with an attorney specialized in insurance law to determine their rights and potential recourse against the producer or the unauthorized insurer.