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Stowers Demand in Texas: Stowers Doctrine Explained [2023]

If you’ve been injured in an accident in Texas due to another person’s negligence, you have the right to be fully compensated for your medical bills, property damage, lost wages, and other costs. But what if the other party and their insurance company do not want to pay up?

Enter the Stowers Demand.

The Stowers Demand is a powerful legal tool that Texas personal injury lawyers use to pressure insurance companies to offer reasonable settlement payments to victims. This time-sensitive demand letter is sent to the insurance company informing them of their responsibility to make a reasonable settlement offer – or face legal action – ie, a lawsuit.

In this article, the personal injury lawyers at Varghese Summersett Injury Law Group explain the Stowers Doctrine in Texas and how this tool may help you get the just compensation you deserve.

What is the Stowers Doctrine in Texas?

The Stowers Doctrine is a legal principle that originated in Texas. In essence, it requires an insurance company to act in good faith when handling a settlement demand from an injured party. If the insurance company fails to do so and the case proceeds to trial, the insurance company can be held liable for any damages in excess of the policy limits.

For example, let’s say you were injured in a car accident, and the at-fault driver’s insurance policy has a limit of $50,000. If you make a settlement demand for $50,000, and the insurance company rejects it without a reasonable basis, they may be liable for any damages awarded at a subsequent trial that exceed $50,000. So, if a jury awards you $75,000 in damages, the insurance company may have to pay the full $75,000, even though it’s more than their policy limit.

Why is it Called a “Stowers” Demand?

Stowers Demands are named after a 1929 case, G.A. Stowers Furniture Co. v. American Indemnity, in which the Texas Supreme Court held that an insurance company could be held liable for an excess judgment if it refused to settle a case within its policy limits when it could have done so.

What is the Purpose of a Stowers demand?

The purpose of a Stowers Demand is to settle a case for the policy limits of the insurance policy, and to hold the insurance company liable for an excess judgment if it refuses to settle the case within its policy limits when it could have done so.

A Stowers Demand Can Be A Powerful Legal Tool

How Does a Stowers Demand Work?

Under the Stowers Doctrine, an injured party or their attorney must make a settlement demand that is within the insurance policy limits. The demand letter must be clear, specific, and unambiguous. If the insurance company receives a valid settlement demand that complies with the necessary requirements, they have a duty to respond in good faith. This means they must conduct a reasonable investigation into the claim, evaluate the demand, and either accept it or reject it for a valid reason.

If the insurance company rejects a valid settlement demand without a reasonable basis, and the case proceeds to trial, it can be held liable for any damages in excess of the policy limits. This includes not only the amount of damages awarded by the jury but also any costs and attorney’s fees incurred by the injured party in pursuing the claim.

When Should You Make a Stowers Demand?

A Stowers demand can be made at any time during the claims process, but it is typically made after the injured party has undergone medical treatment and has a clear understanding of their injuries, the medical costs associated with them, the long-term ramifications, and any other losses they have suffered. It is important to make a Stowers Demand before the statute of limitations expires, which is typically two years from the date of the accident in Texas.

What Should Be Included in a Stowers Demand?

For a Stowers demand to be valid, it must meet certain requirements including:

  • The settlement demand is within the policy limits;

  • Liability is reasonably clear;

  • The settlement terms are such that a reasonable insurer would accept the offer;

  • The demand must be unconditional; and

  • The demand must offer a full and final release.

The demand packet will also include evidence of the injury and damages, such as pictures, police reports, medical bills, etc. Additionally, the demand will include a deadline for the insurer to respond. If the insurance company refuses to settle after Stowers Demand, they can expect a lawsuit.

Can You Make a Stowers Demand on Your Own?

Technically, you can make a Stowers Demand on your own without an attorney, but it is not recommended. A Stowers Demand is a legal document, and making mistakes or leaving out important information could negatively impact your case. It is important to have an experienced personal injury attorney draft and send the Stowers Demand packet on your behalf. The experienced attorneys at Varghese Summersett Injury Law Group can build a strong Stowers Demand packet that accurately documents your claim, making sure you get the compensation you deserve.

Why is the Stowers Demand an Effective Tool?’

By sending a Stowers Demand, a plaintiff’s attorney can put pressure on the insurer to settle the claim within policy limits, and can potentially create an incentive for the insurer to do so. If the insurer fails to settle within policy limits, the plaintiff may be able to recover damages in excess of the policy limits, which can be a significant increase in recovery.

What Happens If the Insurer Accepts the Stowers Demand?

If the insurer accepts a Stowers Demand, it means that they have agreed to settle the plaintiff’s claim within policy limits. This typically means that the case will be resolved once the insurer pays the agreed-upon amount.

Once the payment is made, the plaintiff agrees to release the defendant and the insurer from any further liability related to the claim. This means that the plaintiff cannot pursue any additional claims against the defendant or the insurer related to the same incident.

Overall, if the insurer accepts a Stowers Demand, it can be a positive outcome for both the plaintiff and the defendant. The plaintiff is able to recover damages for their injuries, and the defendant is able to avoid the risk of a judgment that exceeds the policy limits.

How Long Does the Insurance Company Have to Pay?

The insurance company usually has a certain amount of time to make the payment to the plaintiff.  In practice, insurance companies in Texas typically aim to pay out settlements within 30 to 45 days of reaching an agreement. However, the actual timeframe can vary depending on the complexity of the claim, the amount of the settlement, and the insurance company’s internal processes and procedures.

What Happens if the Insurer Rejects the Stowers Demand?

If the insurer rejects a Stowers Demand, it means that they have chosen not to settle the plaintiff’s claim within policy limits. This can result in a number of different outcomes, but legal action is generally the next step.

The plaintiff likely will choose to file a lawsuit and, if successful in court, the insurer may be held liable for damages that exceed the policy limits. This means that the insurer would be responsible for paying the full amount of the judgment.

If the plaintiff is unsuccessful in court, or if the judgment is within the policy limits, the insurer will be required to pay the plaintiff the amount of the judgment, up to the maximum amount specified in the policy.

If the insurer rejects the Stowers Demand and the plaintiff decides to pursue the case in court, the insurer may be required to pay additional costs associated with the litigation, such as legal fees and court costs. These costs can be significant, especially if the case goes to trial.

Rejecting a Stowers Demand can lead to a more complex and potentially costly legal process for both the plaintiff and the defendant. It’s important to work with an experienced attorney who can help guide you through the process and ensure that your rights are protected.

Injured in an Accident? Contact Us.

The Stowers Doctrine is an important legal principle in Texas that allows injured parties to receive just compensation for their injuries. If you believe your case may qualify for Stowers Demand, contact Varghese Summersett Injury Law Group to schedule a free consultation with an experienced personal injury attorney.

We have vast experience handling Stowers Demands and will work diligently to ensure you receive every penny you deserve. If we can’t do that with a Stowers Demand, we are prepared to file a lawsuit and take your case to trial if necessary. You didn’t ask to be put in this position, and you shouldn’t should this burden alone.

Best of all, we work on contingency, which means we only get paid if you get paid. It won’t cost you anything out of pocket to hire our team, which handles personal injury and wrongful death cases in North Texas.

 Call 817-207-4878 (HURT) today and let us get to work for you


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