What is a Stowers Demand?

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What is a Stowers Demand? - Shamieh Law

There are Many Different Types of Personal Injury Cases

A Stowers demand is specific to Texas personal injury cases only. The demand is requesting that the insurance company for the at-fault party pay the policy limits available within a set time period. If the insurance company fails to pay the policy limits within that time frame, the insurance company (not the at-fault party) may be on the hook for a verdict that is excess of the policy limits.

What is the History of Stowers Demand?

The Stowers demand can be traced back to a 1929 case involving G.A. Stowers Furniture Co v. American Indemnity, Co. In that case, a horse-drawn carriage and a vehicle collided, and the injured party sent the Stowers defendants a letter that presented them with an opportunity to settle the case within their insurance policy limits. In this letter, a set time period was established in which the defendants could accept and pay the policy limits. Stowers’ insurance company – American Indemnity, Co. – did not want to settle and instead took the case to trial in an effort to save money.

Unfortunately for them, they lost the case, and GA Stowers sued the insurance company, stating they had an obligation to pay the policy limits and protect the insured party. The case went to the Texas Supreme Court, where it was upheld that an insurance adjuster is “held to that degree of care and diligence which a man of ordinary care and diligence would exercise in the management of his own business.” This verdict then created a cause of action, which made insurance companies liable for a verdict in excess of an insured’s policy limits.

What Are the Requirements of Preparing a Valid Stowers Demand?

In Texas, a Stowers demand is only valid if liability is “reasonably clear” for a sum equal to 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 be the right decision. Before a Stowers demand letter can be sent, the following conditions must be met:

  • It must be clear that the insured person is at-fault
  • You must give the insurance company a reasonable time frame to respond (usually three weeks)
  • The amount of money that is being demanded must be less than or equal to the policy limits
  • It must be clear that any reasonable insurance company would pay the amount demanded
  • There must not be any additional conditions within the demand
  • The demand must be clear in its agreement to give the insurance company a full release

In most cases, the insurance company will have 14-21 days to respond to the demand. However, they may have more time if it is necessary.

What Are the Benefits of Sending a Stowers Demand?

Simply put, it places pressure on the insurance company to pay the policy limits to avoid the risk of a verdict that is excess of the policy limits. Another benefit is protecting the injured person from an insolvent judgment against an individual with not enough assets to cover a large verdict. In most cases, individuals do not have the assets or income necessary to pay damages that exceed their insurance policy – but an insurance company does. Because of this, you may be able to take your case and know that an insurance company may be on the hook for the entire verdict. If you have specific questions about this or would like to learn more, please do not hesitate to contact Shamieh Law today.

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