By the way, you might want to do some reading about Tennessee dog bite law.
Also by the way, if you haven't been served with anything, how do you know you've actually been sued?
Unless you want to acquiesce to this person's demand for payment, there isn't anything you can do to keep yourself from being sued. However, telling someone, "I'm going to sue!" and actually suing are obviously very different things. If/when you get sued and served, tender your defense to your renter's insurance carrier (you should probably put the carrier on notice now that something may be coming). If the carrier doesn't pick it up, then you'll have to defend yourself.
P.S. This isn't legally relevant, but dogs and fireworks don't generally go well together, so I'm having a hard time understanding the idea of bringing a dog to a "fireworks party."
Owners are to control their animals at all times. Perhaps the fireworks caused your dog stress that you were not aware of. Dogs and fireworks are not a good combination.