Anyone involved in a car crash knows that the next step is for their insurance (and possibly lawyers) to get involved. You have to file a claim, have the car accident assessed, and get a sum of damages determined. Only then will the insurance company pay up—most of the time.
In some cases, it’s necessary to get a law firm involved. Having the best car injury lawyer in West Houston is never bad, given that insurance companies tend to act in self-interest.
The insurer may refuse to cover the amount stated in the policy. This situation is exactly what led to the Texas Stowers Doctrine.
- The Stowers Doctrine protects policyholders from unfair insurance company decisions. The doctrine requires insurance companies in Texas to accept offers that their client would reasonably accept themselves.
- To send a successful Stowers demand letter, the fault must be clear, and the damages must equal or exceed the defendant’s insurance policy limits. This process helps secure a fair settlement.
- If your insurance company refuses to pay, an attorney can step in to ensure that they fulfill their obligations. Just like in the original 1929 Stowers case, your attorney can help hold the insurance company accountable.a
What Is the Stowers Doctrine?
The Stowers Doctrine is a Texas rule that requires a liability insurer to accept a settlement demand within policy limits if an ordinarily prudent person managing his own business would have accepted that offer. The doctrine gives a policyholder a cause of action against his insurer for negligently refusing a settlement offer within policy limits.
How Did the Stowers Doctrine Begin?
The Stowers Doctrine dates back to a ruling from 1929. A car wreck involving a vehicle belonging to the Stowers Furniture Company was clearly the company’s fault. Stowers’ insurance policy with American Indemnity set limits at $5,000. With this limit, Stowers would have had to pay any car crash expenses exceeding $5,000. However, American Indemnity refused to pay their part to the other driver.
The plaintiff (the party claiming against Stowers) made a time-sensitive offer for a settlement within the insurance policy’s limits, which would have let the defendant off additional costs. American Indemnity once again refused to pay up the $5,000, acting on Stowers’ behalf. The plaintiff’s attorney got involved and settled the case in court: the plaintiff received an award of $12,207 plus costs.
Stowers hired lawyers and successfully sued American Indemnity for not accepting the offer. The upshot is twofold:
- In a car wreck in Texas, an insurance firm must accept an offer that their client would reasonably take themselves.
- A good car accident attorney can work wonders.
How Do I Send a Stowers Demand Letter?
To send a Stowers demand letter, your attorney writes to the at-fault driver’s insurance company with an offer to fully and completely settle the case within the insured’s policy limits. The letter should point out that the demand is made pursuant to the Stowers doctrine.
For your lawyer to send a successful demand, it’s crucial that:
- Fault is clear
- The damages are equal to or over the limits of the defendant’s insurance policy.
The purpose of a Stowers demand letter is to reach an adequate settlement that releases the defendant from liability. A good attorney can help you determine this and take the case to the insurance company.
What Must a Stowers Demand Include?
A Stowers duty to settle arises only when the settlement demand meets 3 prerequisites:
- The claim against the insured is within the scope of coverage.
- The demand is within policy limits and proposes to release the insured fully.
- The terms of the demand are such that an ordinarily prudent insurer would accept it.
A demand to settle for policy limits is adequate, but a demand above policy limits, even though reasonable under the circumstances, does not trigger the insurer’s Stowers duty to settle. The deadline also matters. If the deadline is unreasonably short or is given before the liability and damages facts have been sufficiently developed, the insurer may be relieved of its obligation to settle.
The purpose of a Stowers demand letter is to reach an adequate settlement that releases the defendant from liability. A good attorney can help you determine this and take the case to the insurance company.
When insurers refuse to settle reasonably, a Stowers demand can hold them accountable. Attorney Joe Stephens uses this powerful legal tool to help clients secure the compensation they rightfully deserve.
If you’ve been in a car wreck in Texas, you need a good lawyer. Get in touch with the Stephens Law Firm. As your attorney, we can advise you on whether you could send a Stowers demand letter.
Case Study: $325,000 Settlement After an Insurer Refused to Pay Policy Limits
A client suffered a herniated disc in his neck after a car wreck and required surgery. Although the at-fault driver carried only a $30,000 policy, insurer Fred Loya refused to pay even the limits, initially offering just $12,000. Attorney Joe Stephens filed suit and continued increasing demands as the case progressed. On the eve of trial, Fred Loya replaced its legal team, and the new attorney convinced the carrier to offer $325,000. The client ultimately accepted the $325,000 settlement, more than 10 times the original policy limit.
The Stowers Doctrine for Defendants
If you are at fault for a car crash, and your insurance company has received a Stowers demand letter, they need to respond appropriately. The Stephens Law Firm can act as your attorney if your insurance company refuses to pay, just as the Stowers Furniture Company’s lawyers did.
If your insurance company fails to exercise reasonable care when responding to a settlement demand within policy limits, it may be liable to pay the full amount of the adverse judgment rendered against you, even if the amount is in excess of your policy limits.
Call an Experienced Car Accident Lawyer in West Houston
Joe Stephens is one of West Houston’s best car accident injury lawyers. He has 30 years’ experience representing people involved in car crashes and is the attorney you need when filing a claim.
The Stephens Law Firm can help you with a car wreck of any kind. Call us today, and we’ll help you understand all options available to you after a car crash.
