The Stowers doctrine is a Texas legal principle dealing with time-sensitive demands sent to third-party insurance companies. Stowers demands are intended to pressure insurance companies to either settle a claim within policy limits or risk a verdict over policy limits.
What Is the Purpose of the Stowers Doctrine in Texas?
The Stowers doctrine allows personal injury plaintiffs in Texas to submit a demand letter to an insurer when it fails to pay compensation reasonably owed after an accident. It’s a unique part of Texas state law that protects plaintiffs’ rights when negotiating with insurance companies.
Stowers demands are an effective tool for dealing with insurance companies because they put pressure on them to act. An insurance company that receives a Stowers demand is on notice that it has failed to pay a party owed compensation.
Generally, after receiving a Stowers demand, the company has two options: accept the demand and pay the appropriate amount or face court. Most insurance companies are wary of the hassle of a trial and the risk that they will be required to pay more than the policy amount if they lose. Therefore, unless the insurance company has a particularly strong case proving that it does not owe compensation, it’s typically easier for it to accept the Stowers demand and pay the plaintiff appropriately.
What Are the Requirements To Prepare a Valid Stowers Demand?
In Texas, a Stowers demand is only valid if liability is “reasonably clear” for a sum within the policy limit in the case. In the event there is some question as to who is at fault or whether the defendant was negligent, a Stowers demand may not require an insurer to pay the policy limit. Before a Stowers demand letter can be sent, the following conditions must be met:
- It must be clear that the insured party is liable.
- The amount of money that is being sought must be less than or equal to the policy limit.
- It must be clear that a reasonable insurance company would pay the amount requested.
- There must be no additional conditions/requirements within the demand.
- The demand must be clear in its agreement to give the insurance company a full release and pay any outstanding claims.
In most cases, the insurance company will have a few weeks to respond to the demand. However, it may take more time if reasonable.
How Long Does the Insurance Company Have to Pay After an Accident in Texas?
After a car accident in Texas, an insurance company has five business days to pay out your insurance settlement after agreeing to cover all or part of your insurance claim. Once this time has passed, it may be appropriate to send a Stowers demand. If an insurance company takes too long to pay the money it owes, talk to our attorneys to determine whether a Stowers demand is appropriate in your case.
What Happens if the Stowers Demand is Rejected?
If an insurance company rejects a Stowers demand, the case may go to trial. Insurance companies that reject Stowers demands know they’re taking a significant risk. A loss in court can mean a payout significantly higher than the policy limit, depending on the compensable damages the plaintiff suffered. Stowers demands are a useful tool because they force insurance companies to consider whether they want to take this risk.
The experienced Texas car accident attorneys at Shamieh Law aren’t afraid to go to trial to fight for the full and fair compensation you deserve. We go the distance to secure justice and accountability after a car accident.
What Are the Benefits of Sending a Stowers Demand Letter?
Under the Stowers doctrine, if a verdict for the plaintiff exceeds the policy limit, the insurance company may be held responsible for the entire verdict. This means that if you send a valid Stowers demand and the insurance company rejects it, the insurer risks paying a substantial amount—often much more than the policy limit—if a court judgment is rendered against their insured. In many cases, it is more prudent for the insurer to settle within the policy limits to avoid this financial risk.
Stowers demands are frequently used in car accident cases. For instance, if you were injured by a negligent driver, you could file a claim with the driver’s insurance company. If the insurer refuses to pay the policy limit for your case within a reasonable timeframe, your attorney could send a Stowers demand. The insurer would then have the option to either accept and pay the requested amount on time or deny the demand, potentially forcing the case to proceed to court.
History of the Stowers Doctrine — Your Texan Protection
The origins of Stowers demands trace back to G. A. Stowers Furniture Co. v. American Indemnity Co. (1929). In this case, a victim of a car collision sent a letter to G. A. Stowers, one of the involved parties, offering to settle the claim within its insurance policy limits. The letter provided a deadline for the defendant to accept and submit proof of damages.
However, Stowers’ insurer, American Indemnity Co., refused to settle and opted to take the case to trial in an effort to save money. The trial resulted in a loss for American Indemnity. G. A. Stowers then sued the company, arguing that the insurer had an obligation to settle and protect its policyholder.
The Texas Supreme Court ultimately ruled in favor of Stowers, holding that insurance companies have a duty to act in their policyholders’ best interests, just as any other business is expected to serve its customers. This landmark decision established a new legal precedent, allowing insured parties to sue insurers for failing to settle claims when liability is clear.
The Stowers doctrine remains a cornerstone of Texas insurance law, continuing to protect policyholders’ rights against negligent or bad-faith practices by insurance companies.
Think You Might Benefit From a Stowers Demand? Contact Shamieh Law Today.
There are numerous situations in which a Stowers demand may be an appropriate option to consider after a car accident in Texas. However, the Stowers doctrine is complex, and it can be difficult to determine whether it applies to your situation.
If you believe that a Stowers demand might be right for you, Shamieh Law can help. Our attorneys act fast after to make sure your legal matters are handled effectively and efficiently.
Call (469) 813-7332 or contact us online today to schedule your free legal consultation. Para servir mejor a todos los miembros de nuestra comunidad, ofrecemos servicios en español.
