If you've been injured in an accident and are pursuing a personal injury claim, you may hear the term “Stowers demand” during settlement negotiations. This legal tool can be a powerful way to encourage an insurance company to pay a fair settlement. Understanding what a Stowers demand is and how it works can give you insight into the personal injury claims process and your rights as an injured party in Texas.

1. The Origins of the Stowers Doctrine

The Stowers doctrine comes from a 1929 Texas court case called G.A. Stowers Furniture Co. v. American Indemnity Co. In this case, the court established that an insurance company has a duty to protect its policyholder (the insured) from judgments that exceed the policy's limits if a reasonable settlement offer is made within those limits.

In other words, if an insurance company fails to settle a case within the policy limits when it has the opportunity to do so, and the case goes to trial with a verdict that exceeds those limits, the insurance company can be held liable for the entire judgment—even if it exceeds the policy limits.

2. How a Stowers Demand Works

A Stowers demand is a settlement offer made by the injured party (the plaintiff) to the defendant's insurance company. The demand must meet certain legal requirements to trigger the insurance company's duty under the Stowers doctrine. If these requirements are met, and the insurance company refuses to settle the case within the policy limits, it could be on the hook for the full amount of any judgment, even if it exceeds the insured's coverage.

To trigger the Stowers doctrine, the following must typically be true:

• Reasonable settlement offer: The demand must be for an amount within the defendant's insurance policy limits, and the amount must be reasonable given the facts of the case and the damages involved.
• Liability is clear: The facts of the case must indicate that the defendant is likely to be found liable for the plaintiff's injuries.
• Within policy limits: The demand must be for an amount that falls within the limits of the defendant's insurance policy.

When a Stowers demand is made, it puts pressure on the insurance company to settle the case because failing to do so could result in the insurer being responsible for an amount greater than the policy limits.

3. Why a Stowers Demand Can Be Important in Personal Injury Cases

In personal injury cases, the goal is often to reach a fair settlement without going to trial. However, insurance companies are businesses, and they sometimes try to settle cases for less than what the injured party deserves. A Stowers demand can be a powerful tool to encourage the insurance company to offer a reasonable settlement.

By making a Stowers demand, you are essentially putting the insurance company on notice that if they refuse to settle within the policy limits and a court later awards a judgment that exceeds those limits, they could be held responsible for the entire amount. This creates a financial incentive for the insurer to settle the case rather than risk a costly judgment at trial.

4. When Should a Stowers Demand Be Made?

A Stowers demand is typically made when the plaintiff's attorney believes that the case is strong and that the damages could exceed the defendant's insurance policy limits. It is often used as a last attempt to settle a case before going to trial.

The timing of a Stowers demand is critical. If the demand is made too early, before all the facts of the case are fully developed, the insurance company may not take it seriously. If it's made too late, after the case has already gone to trial, it may not be as effective. This is why working with an experienced personal injury attorney is important—they will know when and how to use a Stowers demand to maximize its impact.

5. What Happens If the Insurance Company Refuses the Stowers Demand?

If the insurance company refuses a Stowers demand and the case goes to trial, the insurer could face significant financial exposure if the jury awards a verdict that exceeds the policy limits. In such cases, the insured party could hold the insurance company liable for the entire amount of the judgment, even the portion that exceeds the policy limits.

For example, if the defendant has an insurance policy with a $100,000 limit and the jury awards $300,000, the insurance company could be responsible for the entire $300,000 if it rejected a reasonable Stowers demand within the policy limits.

6. Conclusion: How a Stowers Demand Can Protect Your Rights

If you've been injured in an accident and are facing an insurance company that refuses to offer a fair settlement, a Stowers demand can be a valuable tool to pressure the insurer into settling for a reasonable amount. However, it's a legal strategy that must be used carefully and strategically.

At The Law Office of Noor Ali, PLLC, we have years of experience with Stowers demands and negotiating with insurance companies to secure fair compensation for our clients. If you're dealing with an insurance company that won't settle, contact us today to discuss your case and how we can help.