A powerful but underutilized area of Texas law known as the Stowers Doctrine can potentially allow an injured person to recover more than the defendant’s insurance policy limits. The at-fault party’s insurance company must pay the difference.
Many people believe their recovery is limited to the at-fault party’s insurance coverage, but Texas law may allow additional recovery in certain circumstances. This is not necessarily true, but getting the compensation you deserve requires an attorney who understands Stowers.
Our personal injury lawyers in Sugar Land have nearly two decades of combined legal experience. We prepare every qualifying case for trial to pursue the full value of your injuries, regardless of the policy limits. Call today for a free case consultation.
What Is the Stowers Doctrine in Texas?
The Stowers Doctrine comes from a landmark 1929 Texas case called G.A. Stowers Furniture Co. v. American Indemnity Co. In that case, an employee of Stowers Furniture was driving a company truck and injured a woman in an auto accident.
The woman offered to settle her claim for $4,000. The insurance policy limits were $5,000, and her medical expenses alone had already exceeded that amount. The insurance company refused to settle, and maintained that its only obligation was to defend the case through trial.
The case went to a jury, which returned a $14,000 verdict (nearly three times the policy limits).
The Texas court held that because the insurance company had taken full and absolute control over the litigation under the terms of the policy, it also took on a corresponding duty to exercise ordinary care and prudence in protecting the interests of its insured.
How Does Stowers Impact Cases Today?
When American Indemnity Co. rejected a reasonable settlement offer within policy limits, one that any ordinarily prudent insurer should have accepted, it negligently exposed its own policyholder to a massive excess judgment.
The court held the insurer liable for the entire $14,000. That foundational principle still governs Texas personal injury law today, nearly a century later.
The Stowers Doctrine stands for a simple but powerful proposition. When an insurance company unreasonably refuses to settle a claim within policy limits, the insurer, not the defendant, is responsible for paying the full amount of the resulting judgment, even if it far exceeds the policy limits.
Why Is the Stowers Doctrine So Important?
To understand why the Stowers Doctrine matters, consider a typical personal injury case.
When one person causes an accident and hurts another, the injured party files a claim against the at-fault party’s insurance. From that point forward, the insurance company takes over.
Under the terms of virtually every liability insurance policy in Texas, the insurer has the exclusive right to control the defense and decide whether to accept or reject any settlement demand. The insurance company makes the decisions, not the defendant.
The defendant usually has no say in whether a reasonable settlement offer gets accepted or rejected. In many cases, the insurance company never even consults the defendant about these decisions. This is why understanding the Stowers Doctrine is so important for accident victims and their attorneys.
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What Happens When the Insurance Company Rejects a Reasonable Demand?
Here’s where the unfairness comes in. Imagine you’re injured in a car accident in Sugar Land. Your medical bills total $35,000. The at-fault driver’s insurance policy has the Texas minimum coverage of $30,000.
Your attorney sends the insurance company a demand letter offering to settle for the full $30,000 (the policy limits) in exchange for a full release of all claims against the defendant.
Now, think about this from any reasonable perspective.
Your medical bills alone are $35,000. That doesn’t include future medical treatment, lost wages, pain and suffering, physical impairment, mental anguish, or any of the other categories of damages a jury can award.
How Does the Insurer’s Decision Impact the Client?
It is abundantly obvious that if this case goes to trial, the verdict will exceed $30,000. Any reasonably prudent insurance company should accept that settlement offer. But the insurance company rejected it.
Maybe the adjuster thinks the case will go away, or maybe the insurer is playing hardball. Maybe the claim just fell through the cracks of a bureaucratic system. Whatever the reason, the insurance company forces the case to trial. The jury hears the evidence and returns a verdict of $500,000.
What Happens Without Stowers?
Without the Stowers Doctrine, the insurance company would pay its $30,000 policy limit, and the defendant would owe the remaining $470,000 out of his or her own pocket.
The defendant, who had no role in rejecting the settlement offer, is now personally on the hook for a $470,000 judgment that could have been completely avoided.
What Happens With Stowers?
Because the insurance company made the decision to reject a reasonable settlement demand, the insurance company unfairly exposed its own insured to a verdict that never should have happened.
The defendant now has a claim against his own insurance company for that $470,000 excess. This claim is known as a Stowers claim. It is important to note that in Texas, a Stowers claim is not technically a “bad faith” claim. It is a negligence-based cause of action.
The insurer is held liable because it failed to exercise ordinary care in protecting its insured’s interests when it had the power and the duty to settle.
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How Does Stowers Work in Practice?
Once a verdict exceeds the policy limits, the plaintiff’s attorney will often work with the defendant to pursue the insurance company for the full judgment. The defendant can assign their Stowers claim to the plaintiff, allowing the injured party to go directly after the insurer to collect the excess amount.
Sometimes the insurance company recognizes the situation and pays the full judgment without a fight. Other times, a follow-up action is necessary to enforce the Stowers claim and prove that a reasonably prudent insurer would have accepted the original demand.
Either way, the injured person recovers the full value of the verdict, and the insurance company bears the financial responsibility for its own decision to reject a reasonable settlement.
What Makes a Stowers Demand Different from an Ordinary Settlement Offer?
Not every settlement demand triggers the Stowers Doctrine. A Stowers Demand is a carefully crafted settlement offer that meets specific criteria established by Texas courts.
- The demand must be for an amount within the at-fault party’s insurance policy limits.
- The claim must be within the scope of the insurance policy’s coverage.
- The demand must offer a full and unconditional release of all claims against the insured defendant.
- The terms of the demand must be such that a reasonably prudent insurer would accept it, given the likelihood that the insured faces exposure to a verdict exceeding the policy limits.
When properly drafted and sent to the insurance company, it puts the insurer on formal notice that rejecting the demand could expose the insurer to liability for the full amount of any resulting judgment, not just the policy limits.
Why Are the Elements of a Stowers Demand Important?
The requirements of a Stowers Demand ensure fairness to the insurance company. The insurer must be given a genuine, reasonable opportunity to resolve the case within policy limits.
But when those requirements are met, and the insurer still refuses to settle, the Stowers Doctrine shifts the risk of an excess verdict onto the insurer.
Drafting a valid Stowers Demand is one of the most technical and consequential steps in a personal injury case. Even small errors can render the demand invalid and eliminate the client’s ability to hold the insurer accountable. This is why having an experienced Stowers Demand attorney matters.
What Types of Personal Injury Cases Does the Stowers Doctrine Apply To?
The Stowers Doctrine applies across all types of third-party personal injury claims in Texas, covering any situation where someone else’s negligence caused your injuries, and that person has liability insurance.
- Motor vehicle accidents.
- Slip-and-fall and premises liability cases.
- Workplace injuries involving third-party negligence.
- Wrongful death claims.
- Commercial vehicle and trucking accidents.
Essentially, any time there is a liability insurance policy standing between the injured person and the at-fault party, the Stowers Doctrine may come into play if the case value exceeds the available coverage.
Why Don’t More Personal Injury Attorneys Pursue Stowers Cases?
This is one of the most important questions an injured person can ask, and the answer may surprise you. The reasons more attorneys don’t pursue this path generally fall into three categories: Knowledge, resources, and trial skills.
Knowledge
Many attorneys do not completely understand the Stowers Doctrine. Making a Stowers Demand requires knowledge of complex case law and an understanding of how insurers handle settlement offers.
Attorneys who primarily handle pre-litigation settlements may never have had reason to learn these principles in depth. As a result, they genuinely believe that the policy limits are the ceiling and they pass that belief on to their clients.
Resources
Pursuing a Stowers case requires an investment of time and resources. An attorney must devote potentially weeks to trial preparation. This means conducting discovery, retaining expert witnesses, and preparing trial exhibits.
Unlike a straightforward policy-limits settlement that can be resolved in months, a Stowers case may require years of dedicated litigation. Many firms are structured around resolving as many cases as quickly as possible, and pursuing a Stowers case doesn’t fit that model.
Trial Skills
The Stowers Doctrine only delivers results if the attorney is prepared to take the case all the way to a jury verdict. That requires real trial experience: the ability to present a compelling case, examine and cross-examine witnesses, and persuade a jury.
Not every personal injury attorney has that courtroom experience, and the reality is that many attorneys prefer to avoid trial altogether. A Stowers strategy only works if the attorney behind it is truly prepared to follow through.
How Does a Stowers Demand Case Progress?
While every case is different, here is a general overview of how the Stowers process unfolds:
Step 1: Case Evaluation
We review your injuries and your medical records, as well as the at-fault party’s insurance coverage. If your damages clearly exceed the available policy limits, we identify the case as a Stowers candidate.
Step 2: The Stowers Demand
We send a formal Stowers Demand Letter to the at-fault party’s insurance company, offering to settle the case for the amount covered by their policy in exchange for a complete release of all claims.
It puts the insurer on notice that rejecting this demand could expose it to liability for the full amount of any trial verdict.
Step 3: Insurance Company Response
The insurance company can either accept the demand and pay the policy limits or reject it. If the insurer accepts, the case resolves, and your claim is settled. If the insurer rejects the demand, the Stowers has been “blown,” and we proceed to trial preparation.
Step 4: Trial Preparation and Trial
We build the strongest possible case for trial to develop a compelling narrative for the jury. We retain medical and economic experts and prepare demonstrative exhibits. At trial, we present the full extent of your injuries and damages and ask the jury to award what the case is truly worth.
Step 5: Collecting the Full Verdict
If the jury returns a verdict that exceeds the policy limits, we pursue the insurance company for the full amount.
The defendant can assign their Stowers claim to you, which enables us to pursue the insurer to recover the excess. Sometimes, the insurer will pay without needing additional litigation; other times, we must take action to enforce the Stowers claim.
Why Do Some Attorneys Settle for Policy Limits Even After the Stowers Is Blown?
Many personal injury attorneys will tell their clients that the most they can recover is whatever the at-fault party’s insurance policy covers. If the policy limits are $30,000, you’ll hear something like, “We can’t get you any more than $30,000.”
In some of these cases, common car accident injuries in Sugar Land can require surgery that will cost $200,000 or more. The attorney will send a valid Stowers Demand, the insurance company will reject that demand, and the attorney will still ultimately settle for the policy limits.
At that point, the door is open to pursue the full value of the case at trial, but many attorneys choose not to walk through it. Consciously or unconsciously, some attorneys feel limited by the policy limits when they do not have to be.
Should Your Attorney Always Issue a Stowers Demand?
To be clear, the majority of personal injury cases resolve within the policy limits, and that is the normal outcome. In many situations, the insurance company recognizes the strength of the claim and accepts the Stowers Demand, which resolves the case.
In other situations, the at-fault party carries a substantial commercial policy with $1 million or more in coverage, and the injuries do not approach that amount. And in many cases, the injuries, while real and deserving of fair compensation, are not so severe that they would exceed even modest policy limits.
All of those are perfectly appropriate outcomes, and we handle cases like that every day at our firm. But when the injuries clearly exceed the available coverage and the insurance company has rejected a reasonable demand within policy limits, the Stowers Doctrine becomes critical.
Can I Really Recover More than the At-Fault Driver’s Insurance Policy Limits?
Yes. If your attorney sends a valid Stowers Demand, the insurance company wrongfully rejects it, and the case goes to trial where the jury returns a verdict exceeding the policy limits, the Stowers Doctrine allows you to pursue the insurance company for the full amount of the judgment, not just the policy limits.
The key is having an attorney who understands the Stowers framework and is prepared to take the case to trial.
What Are The Minimum Auto Insurance Policy Limits In Texas?
According to the Texas Department of Insurance’s Auto Insurance Guide, the minimum liability insurance is $30,000 per person and $60,000 per accident for bodily injury, plus $25,000 for property damage.
In serious injury cases, $30,000 in coverage is often grossly insufficient, which is precisely when the Stowers Doctrine becomes most important.
How Long Do I Have to File a Personal Injury Claim In Texas?
Under Texas Civil Practice and Remedies Code Section 16.003, you generally have two years from the date of injury to file a lawsuit. Missing this deadline can bar your claim entirely, so it is important to consult with an attorney as soon as possible after an injury.
What if the Insurance Company Just Pays the Policy Limits After Receiving the Stowers Demand?
That’s a good outcome. If the insurer accepts the Stowers Demand and pays the full policy limits, you receive compensation without the time and expense of a trial. The Stowers Demand is designed to give the insurer every reasonable opportunity to resolve the case.
It is only when the insurer unreasonably rejects the demand that the doctrine creates additional exposure for the insurer.
Does Stowers Doctrine Apply to Uninsured or Underinsured Motorist Claims?
No. The Stowers Doctrine only applies to third-party liability claims. If you are making a claim under your own insurance policy’s Uninsured Motorists Coverage, the Stowers framework does not apply.
The doctrine is specifically designed to address the situation where a liability insurer, acting on behalf of the defendant, unreasonably refuses to settle a claim.
Why Choose Lone Star Injury Attorneys As Your Stowers Demand Law Firm?
At Lone Star Injury Attorneys, when a client’s injuries clearly exceed the available insurance coverage and the insurance company rejects a reasonable demand for the policy limits, we prepare your case for trial to pursue the full value of your damages.
- We evaluate every case for Stowers potential. When we identify that a case is worth more than the available insurance coverage, we craft a proper Stowers Demand and begin building the case for trial from day one.
- We invest the time and resources to prepare for trial. We retain the right experts, build compelling evidence, and develop a trial strategy designed to present the full picture of your injuries to a jury.
- We have the courtroom skill to follow through. A Stowers strategy means nothing if the attorney is not prepared to stand in front of a jury and deliver. We are trial-ready, and insurance companies know it.
- We keep you informed every step of the way. We explain the Stowers process, the risks, the timeline, and the potential outcomes so that you can make informed decisions about your case.
Licensed in Texas, Lone Star Injury Attorneys represents the Gold Standard in Personal Injury. Whether your case involves a motor vehicle accident, a slip-and-fall injury, a workplace accident, or any other personal injury claim, we fight for the full value of what you are owed.
Our Stowers Demand Lawyers in Sugar Land Will Pursue the Full Value of Your Case
A Stowers Demand is a commitment to pursuing the full value of your injuries, backed by the preparation and willingness to take your case to trial. We have the knowledge, the resources, and the trial experience to make the Stowers Doctrine work for you.
Lone Star Injury Attorneys has obtained top verdicts in personal injury cases across Texas and goes to trial regularly. Give us the opportunity to help you with your personal injury case. To learn more, call to schedule a free case consultation with us today.
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