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      Response to SEC Form 10-K Comment Letter

      July 20, 2005

    VIA
      EDGAR

    David
      R.
      Humphrey, Branch Chief

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Washington,
      D.C. 20549

    Re:     Covenant
      Transport, Inc.

    Commission
      File No. 0-24960

    Form
      10-K: For the year ended December 31, 2004 ("Form 10-K")

    Dear
      Mr.
      Humphrey:

    This
      letter responds to the Staff's comments to Covenant Transport, Inc.'s Form
      10-K,
      as set forth in the Staff's letter dated July 6, 2005. For your convenience,
      the
      headings and paragraph numbers in this letter correspond to the headings and
      paragraph numbers in the Staff's letter.

    Form
      10-K: For the year ended December 31, 2004

    Management's
      Discussion and Analysis

    Overview,
      page 14

    Increase
      to Claims Reserves, page 15

    1.
      Question:

    We
      note that the $19.6 million adjustment made in the fourth quarter of 2004,
      as
      described in this section and elsewhere in the filing, relates to the 2001-2003
      fiscal years' increases in primary retention amounts for and frequency of
      workers compensation and casualty claims. Supplementally explain to us why
      you
      feel this is a change in estimate versus an error, and is properly recorded
      during 2004.

      Answer:

      We offer the following information supplementally.

          David
            R. Humphrey, Branch Chief

          July
            20,
            2005

          Page
            2

    Executive
      Summary

      Consistent with paragraph 13 of APB 20, we believe the
      $19.6
      million adjustment was a change in estimate, rather than the correction of
      an
      error, because it resulted from subsequent developments including:

    1)  variability
      in the amount covered by the Company, due to the changes in
      retention;

    2)  increased
      frequency of accidents and claims; and

    3)  more
      volatility in the amount of claims costs and settlements

    These
      subsequent developments (i.e., development of large claims, particularly during
      2004 when several large claims incurred during 2003 began to develop with more
      volatility and overall adverse developments), supplemented by a third-party
      actuarial study, afforded us better insight to make improved judgments as to
      our
      estimated ultimate liability for self-insurance reserves.

    History
      of Deductible/Retention Limits

      We have significantly increased the self-insured retention portion of our
      insurance coverage for claims since February of 2001. In February of 2001 we
      had
      a $5,000 deductible for liability claims and a $250,000 deductible for workers'
      compensation claims. At March 2005, we were self-insured for personal injury
      and
      property damage claims for amounts up to $2.0 million per occurrence, subject
      to
      an additional $2.0 million self-insured aggregate amount, which results
      in
      the total self-insured retention of up to $4.0 million until the
      $2.0 million aggregate threshold is reached. We are also self-insured
      for
      cargo loss and damage claims and for workers' compensation for amounts up to
      $1.0 million per occurrence. The following chart reflects the major changes
      in
      our casualty program since March 1, 2001:

                Coverage Period

              Primary

              Coverage

              Primary

              Coverage

              SIR/deductible

              Excess

              Coverage

              Excess

              Coverage

              SIR/deductible

              Prior
                to March 2001

              $1.0
                million

              $5,000

              $14.0
                million

              $0

              March
                2001 - Feb. 2002

              $1.0
                million

              $250,000

              $49.0
                million

              $3.0
                million

              March
                2002 - July 2002

              $2.0
                million

              $500,000

              $48.0
                million

              $3.0
                million

              July
                2002 - Nov. 2002

              $2.0
                million

              $500,000

              $0(1)

              $0(1)

              Nov.
                2002- Feb. 2003

              $4.0
                million

              $1.0
                million

              $16.0
                million

              $3.0
                million

              March
                2003 - Feb. 2004

              $5.0
                million

              $2.0
                million(2)

              $15.0
                million

              $2.0
                million

              March
                2004 - Feb. 2005

              $5.0
                million

              $2.0
                million(2)

              $15.0
                million

              $2.0
                million

              March
                2005 - Feb. 2007

              $2.0
                million

              $2.0
                million(2)

              $48.0
                million

              $0

              (1)

              Represents
                period for which no proof of insurance was available from agent and
                coverage was determined to be invalid.

              (2)

              Plus
                applicable self-insured corridor of $2.0 to $4.0 million. Self-insured
                retention of $1.0 million for cargo
                damage.

      In summary, the table demonstrates that the Company has made several changes
      to
      its risk management program, which has increased the amount of the Company's
      exposure for large claims.

          David
            R. Humphrey, Branch Chief

            July
              20,
              2005

            Page
              3

    History
      of Casualty Accident Trend Rate

      Our frequency rate for casualty claims and workers' compensation claims
      increased significantly between 2000 and 2003 before reversing in 2004. The
      following table illustrates DOT accidents per million miles, the number of
      large
      casualty claims (defined as claims greater than $250,000), and the number of
      workers' compensation claims for our Covenant Transport subsidiary, which
      constitutes 90% of our revenue.

              Calendar
                Year

              2000

              2001

              2002

              2003

              2004

              DOT
                Accident Frequency Ratio

              .706

              .877

              1.237

              1.257

              1.103

              Casualty
                Claims Over $250,000

              12

              13

              17

              13

              7

              Number
                of Workers' Comp Claims

              561

              720

              696

              831

              669

    Although
      the number of large casualty claims declined in between 2002 and 2003, the
      severity (or expected ultimate claim liability) of accidents was greater in
      2003
      for large claims. In addition, since the Company was increasing both its
      deductible and exposure per claim in each of these years, the impact of large
      claims was more significant when compared to overall self-insurance
      liabilities.

    History
      of Balance Sheet Claims Accrual

      Prior to 2001 our reserve for estimated claims was not significant because
      of
      very low self-insured retention amounts. In 2001, our self-insured retention
      increased as management adopted a strategy to manage the increased premium
      costs
      due to changes in the insurance market caused insurers to raise premiums.
      Between 2001 and 2004 our self-insured retention increased significantly, as
      did
      our actual claims experience. Accordingly, we began estimating our individual
      claims reserves and aggregate self-insurance reserves with limited historical
      company-specific claims and development experience.

      Our process for estimating claims included utilizing a third-party claims
      administrator that worked under our direction, having an internal risk
      management committee evaluate all large claims and using actuarial software
      to
      estimate ultimate payouts, concerning the appropriate range for our
      self-insurance reserves. Based on all available information we established
      claims reserves and an estimate of incurred but not reported (IBNR) amounts
      in
      establishing self-insurance reserves for financial reporting. This information
      was updated periodically (at least quarterly) to adjust the self-insurance
      reserve to our estimate of ultimate liability.

      By 2004, we had more experience concerning development of large claims, although
      the most significant claims had occurred during 2003. The aggregate development
      of the large claims was trending to be greater than originally estimated or
      anticipated when using historical development information. In addition, the
      overall size of the self-insurance reserve had grown to $27.4 million at the
      end
      of 2003 as the result of the increase in retention on a per claim basis as
      well
      as an increase in the number of claims. The following table illustrates the
      increase in the self-insurance reserve for estimated casualty and workers'
      compensation claims:

              Year
                ended December 31,

              2000

              2001

              2002

              2003

              2004

              Insurance
                Claims Accrual ($millions)

              1.0

              11.9

              21.2

              27.4

              46.2

    Third-Party
      Actuarial Analysis

      As a result of the changes in retention levels, unfavorable claims development,
      particularly relating to large claims incurred in 2003, and the increases in
      the
      amount of the overall self-insurance reserve, in mid 2004 we engaged an
      independent, third-party actuarial services firm to review our loss history
      and
      provide an estimate of our ultimate payout of claims incurred through August
      2004 in a

          David
            R. Humphrey, Branch Chief

            July
              20,
              2005

            Page
              4

    report.
      This was disclosed in the Company's Form 10-Q for the quarter ended September
      30, 2004. The Company requested the actuary to update the information through
      December 31, 2004, which was received in January 2005. The actuarial firm
      provided additional information concerning industry-wide development trends,
      an
      analysis using different actuarial methods to produce a range of actuarial
      estimates, and additional analysis of our large claims and estimation of
      development of large claims and overall development.

    Development
      of Large Claims

      Between 2003 and 2004, we increased the estimated ultimate amount on several
      large claims, as subsequent information and developments on these claims
      indicated that the initial estimates needed to be increased. These subsequent
      developments included items such as settlement negotiations, additional facts
      concerning the claim, continued inflation in the amount of liability awards
      against truckers generally, unfavorable court decisions, and more experience
      in
      evaluating the overall cost of claims. One large claim incurred in the first
      quarter of 2003 illustrates this point, as the change from the initial estimate
      to the estimate at December 31, 2004, was $2.1 million.

      Based on the subsequent evaluation of the information and the impact of the
      developments described above, supplemented by our third party actuarial review,
      we determined that a change in our estimated ultimate liability, and thus in
      our
      self-insurance accrual, of $19.6 million was warranted.

    Accounting
      Treatment

      Paragraph No. 13 of APB 20 states:

    Errors
      in
      financial statements result from mathematical mistakes, mistakes in the
      application of accounting principles, or oversight or misuse of facts
      that existed at the time the financial statements were prepared.
      In
      contrast, a change in accounting estimate results from new information or
      subsequent developments and accordingly from better insight or improved
      judgment.

      We believe the increase in claims reserve did not meet the definition for an
      error under APB 20. The adjustment was not the result of (1) a mathematical
      mistake, (2) a mistake in the application of accounting principles, or (3)
      an
      oversight or misuse of facts that existed at the time the financial statements
      were prepared. Management used all facts available at the balance sheet date
      concerning the claims, used the processes then in place, took into consideration
      the views of the outside third-party claims administrator, and made an estimate.

      The adjustment meets the definition of change of accounting estimate under
      APB
      20. We believe that this change is a change in estimate consistent with the
      guidance contained in Paragraph 10 of APB
      20,
      which states: “Future events and their effects cannot be perceived with
      certainty; estimating therefore requires the exercise of judgment. These
      accounting estimates change as new events occur, as more experience is acquired,
      or as additional
      information is obtained.”, and Paragraph 13 of APB 20, which states: “… a change
      in accounting estimate results from new information or subsequent developments
      and accordingly from better insight or improved judgment.” The Company’s
      conclusion that it was necessary to increase the self-insurance liabilities
      resulted from more information and experience, as well as continued adverse
      developments. We believe the impact of that conclusion has been appropriately
      accounted for as a change in accounting estimate.

          David
            R. Humphrey, Branch Chief

            July
              20,
              2005

            Page
              5

      For the reasons explained above, the adjustment was properly recorded in 2004
      as
      a change in estimate.

    2.
      Question:

    As
      a
      related matter, we note that you have discussed adjusted net income for the
      $18
      million ($12.2 million net of tax) current year adjustment to claims reserves
      as
      well as net income in your overview of results, and that you have presented
      a
      non-GAAP measure reconciliation to net income for this presentation. Assuming
      that this change represents a change in estimate, we would generally not
      consider it to constitute a "non-recurring" item for purposes of a non-GAAP
      presentation. Accordingly, we believe that this presentation should be
      eliminated from your future reports pursuant to the guidance in Item 10 (e)
      of
      Regulation S-K. Please revise or advise. In this regard, please note we do
      not
      object to the discussion of the effect of this charge on net income in the
      context of the discussion of net income as measured by GAAP. Such a discussion