Prejudgment Interest Rules in Tennessee
At a glance
| Governing law | Tenn. Code Ann. § 47-14-123 preserves eligible statutory and common-law claims and sets a rate ceiling; state Claims Commission claims use § 9-8-307(d) |
|---|---|
| Interest rate | Up to 10% annually under § 47-14-123; contracts subject to § 47-14-103 have its category ceiling. State commission interest is capped by the § 47-14-121 judgment rate |
| When interest starts running | § 47-14-123 sets no fixed start date; the court or jury determines an equitable award for an eligible claim |
| Contract vs. tort claims | Eligible contract claims may receive discretionary interest; personal-injury and wrongful-death claims are barred. A UM-insurer defense to an injury suit does not itself convert the claim to contract (Haddon, 2026) |
| Mandatory or discretionary | Eligible claims: discretionary award by court or jury under equitable principles (§ 47-14-123); personal-injury claims are ineligible under preserved common law |
| Simple or compound | § 47-14-123 sets an annual ceiling but does not expressly address compounding |
| Claims against the government | Successful Claims Commission claims may receive interest as commissioner finds proper, capped by § 47-14-121; contractual rate controls in a qualifying contract action (§ 9-8-307(d)) |
| Other exceptions | § 9-8-307(d) requires facts that would entitle the claimant to judgment against a private person and bars punitive damages; tort damages generally capped at $300,000/claimant and $1 million/occurrence, subject to insurance (§ 9-8-307(e)) |
Requirements one by one
Interest rate
Tenn. Code Ann. § 47-14-123 caps the equitable award at an effective 10% a year. For contracts subject to § 47-14-103, the relevant transaction category supplies the ceiling; a contract may also set an after-breach rate within that section's limits. The Claims Commission uses a different ceiling tied to § 47-14-121(a)'s judgment-rate formula. The Department of Financial Institutions published a 10.75% formula rate for June 2026, so the judgment-rate formula yields 8.75% for July–December 2026. The state municipal advisory service confirms 8.75% as of July 1.
Claims against the government
Tenn. Code Ann. § 9-8-307(d) allows interest on a successful commission claim at the rate the commissioner finds proper, no higher than the judgment rate; a contract action with a stated rate uses that rate. The subsection also requires facts that would support judgment if the state were a private person. Under § 9-8-307(e), tort-damages caps apply, while allowing recovery above them to the extent an applicable insurance policy covers it.
What trips people up
The 2024 Court of Appeals decision in Haddon v. Vanlier treated an injury action defended by the plaintiff's uninsured motorist insurer as a contract claim. On May 12, 2026, the Tennessee Supreme Court reversed that decision: the complaint alleged negligence and sought personal-injury damages, so its gravamen remained personal injury and prejudgment interest was unavailable. A genuine contract claim can still be eligible; the nature of the pleaded claim and damages matters.
Section 47-14-123 preserves the statutory and common-law eligibility rules as they stood on April 1, 1979. Its equitable wording does not remove the personal-injury bar the Supreme Court applied in Haddon. The statute also gives no fixed date for an eligible award to start; that date is part of the equitable decision.
Common questions
Can a personal-injury plaintiff receive prejudgment interest just because an uninsured motorist insurer defends? No. Haddon held the insurer's role did not turn that negligence and injury claim into an interest-eligible contract action.
Does the 10% ceiling always govern a state claim? No. Section 9-8-307(d) uses the § 47-14-121 judgment-rate ceiling, with a stated contract rate controlling a qualifying contract action.
Does the prejudgment statute require compound interest? Section 47-14-123 states an annual ceiling but does not direct compounding.
Statutes and sources
- Tenn. Code Ann. § 47-14-123, accessed 2026-10-06: https://law.justia.com/codes/tennessee/title-47/chapter-14/part-1/section-47-14-123/
- Tenn. Code Ann. § 9-8-307(d)-(e), accessed 2026-10-06: https://law.justia.com/codes/tennessee/title-9/chapter-8/part-3/section-9-8-307/
- Tenn. Code Ann. § 47-14-121(a), 2012 Public Chapter 1043, accessed 2026-10-06: https://publications.tnsosfiles.com/acts/107/pub/pc1043.pdf
- Tennessee Department of Financial Institutions, June 2026 formula rate, accessed 2026-10-06: https://www.tn.gov/tdfi/tdfi-how-do-i/info/formula-rate/formula-rate-history.html
- Tennessee Municipal Technical Advisory Service, July 2026 judgment rate, accessed 2026-10-06: https://www.mtas.tennessee.edu/reference/interest-municipal-court-judgments
- Haddon v. Vanlier, Tennessee Supreme Court, May 12, 2026, accessed 2026-10-06: https://www.courtlistener.com/opinion/10857672/
Source links
Every statute quoted above, linked, with the date we checked it.
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