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What is a Stowers Demand?

A Stowers demand is a time-limited offer to settle a personal injury claim made on behalf of an injured party to the insurance company of an at-fault party to an accident to make them choose between settling the case for an amount within the insurance policy limits or facing potential liability for the full amount of any judgment awarded by a jury at trial even if it exceeds the policy limits. A Stowers demand is typically made in writing to document the timing and reasonableness of the opportunity to settle. The letter then forms the basis of future action against the insurance company when their insured has an adverse judgment entered against them. They are most commonly used by car accident lawyers when representing the injured party to a wreck, but can also be used in claims against homeowner’s insurance policies, commercial liability insurance policies, and other policies that pay claims based upon the liability of the insured for negligent actions resulting in injury to another.

What is a Stowers Demand Letter?

A Stowers demand letter is a time-sensitive demand letter sent to a third-party insurance carrier that offers to settle the claim against their insured for an amount that is within the insured’s insurance policy limits when liability is certain and the value of the claim exceeds the limits of the insured’s policy. Typically, it is sent in the form of a written demand letter in such a way that receipt can be documented and proven.

Where Does the Name “Stowers Demand Letter” Come From?

The origin of the Stowers demand letter dates back to an opinion handed down in 1929 in the G.A. Stowers Furniture Co. v. American Indemnity, Co., 15 S.W.2d 544 (Tex.). In that case, a vehicle collided with a horse-drawn carriage.  The non-negligent party served upon the Stowers Defendants a letter giving them an opportunity to settle within their policy limits. The letter gave a set time period in which to accept and offered proof of the excessive damages.  Their insurance company, American Indemnity, Co., refused to settle and went to trial to try to save money. They lost. As a result, the insured (GA Stowers) sued the company alleging they had an obligation to settle and protect the insured in that situation.

The Texas Supreme Court held that an insurance adjuster and his company are “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 created a new cause of action under which insurers could be held liable for the negligent failure to settle their insured’s claim when a reasonable adjuster would do so if conducting his own affairs.

What is Required For a Stowers Demand to Be Valid?

Demand LetterWhile no specific form has been laid out, there are several Texas Court opinions on what it takes for a Stowers demand letter to trigger the above duty. Liability must be clear. Further, there must be clear terms under which the demand can be accepted and reasonable time limitations under which to evaluate the claim. Lastly, there must be an offer to fully and finally release the insured from liability.  Once the Stowers Demand is done properly, then you must go down, try the case, and win an excess verdict. Then and only then, can you attempt to enforce the excess judgment against the insurance company.

The Clear Liability Requirement

In order for a Stowers demand to be valid, liability for an amount equal to their policy limit in the case needs to be “reasonably clear.”  If there is significant room for argument about who is at fault or whether the defendant was “negligent,” your car accident lawyer will have a hard time making a Stowers demand stick. Ultimately, the standard that the adjuster’s actions will be judged by is “would a reasonable adjuster have paid the policy limits under the circumstances?”  The less clear the liability is, the harder it is to jump this hurdle.

Conversely, the higher the damages are, the less important this is. For example: if the damages are likely to warrant a verdict of $40,000 but the policy is only $30,000 and liability is uncertain—meaning the damages could be reduced by a percentage of negligence of the plaintiff—your Stowers demand letter is far less likely to hold up than if your damages are clearly in the millions and there is only a $30,000 policy with a chance of a split negligence finding. Remember, the question is would a reasonable adjuster have accepted an offer to settle the claim if it were his own money at risk?

The Must Be an Offer of a Full and Final Release

The offer to release the insured from liability made in a Stowers demand letter must be an offer of a full and final release.  Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489 (Tex.1998). This means the letter needs to make clear that all hospital liens and insurance subrogation claims are being resolved out of the policy limits. Otherwise, you have not truly released the defendant of liability.

Clear Settlement Acceptance Terms and a Reasonable Period to Evaluate

If the terms of how to accept the settlement are not clear, the demand may well not be valid. So, the letter should specify exactly how much is to be paid and when the deadline to pay is. Furthermore, it needs to spell out that all hospital liens and subrogation claims have either been settled (with proof) or provide clear evidence they will be resolved out of the proceeds.  (Practice Tip: We often do this by stating that as a part of the agreement, we will negotiate any and all liens and subrogation claims and provide the defense with drafting instructions so that they can pay those amounts directly out of the proceeds.)

Frequently Asked Questions

Below are the answers to the most frequently asked questions our law firm receives pertaining to Stowers demand letters. They are divided into FAQs for sending and FAQs for receiving Stowers demand letters.

FAQs For Sending a Stowers Demand Letter

How Do You Collect An Excess Verdict on a Blown Stowers Demand Deadline?

In order to have a legal right to collect the excess verdict against the insurer first, you must take an excess judgment against their insured. After the verdict is taken, you then have to seek a turn-over order against the defendant. This is essentially a judgment collection proceeding whereby the Court orders the defendant to turn over his cause of action against his own insurance company to pursue the claim he has against the insurance company for the negligent failure to settle the claim when given the opportunity.

Once the insurer’s rights are turned over to the plaintiff, then the plaintiff stands in the defendant’s shoes. He or she may now sue the insurance company for negligence as well as insurance code violations including treble damages.

What Happens When the Insurer Accepts the Stowers Demand?

Once the demand is accepted by the insurance company, the claim is settled for the stated amount in the Stower demand letter and no further action may be maintained against the insured or the insurance company in relation to the personal injury claim.

Can I Make A Stowers Demand Against My Own Insurance Company?

No. A Stowers demand only works in a third-party insurance situation. When you threaten (by your Stowers demand) to take a judgment against their insured, you are putting the insurance company in a position of choosing to try to save themselves money by putting their client at risk of an excess verdict. In a First-party insurance situation (i.e. uninsured/underinsured motorist coverage),  you are the insured.  You cannot threaten to take an excess verdict against yourself if they refuse to pay the claim. The money is their money to risk, so they may choose to do so without violating any duty to you.

In fact, the Texas Supreme Court has further insulated UIM/UM insurers by holding that they effectively have no duty to negotiate or pay you a dime until you “present” a claim by taking judgment and having a jury determine exactly how much they owe.  As a result, UIM/UM carriers are under no real obligation to treat you fairly.

Can Multiple Parties Do a Single or Joint Stowers Demand?

A Stowers demand letter that tries to settle multiple parties in an all-or-nothing type settlement will not trigger the Stowers duty. A lot of Stowers demand mistakes are made in situations where there are multiple claimants. For example, five people are seriously injured in a car accident and the at-fault driver only has a minimum limits insurance policy, Can the five of them jointly demand the policy limits of 60,000.00 and have a valid Stowers Demand? The answer is “no.”  To trigger a Stowers duty, the offer to settle one person’s claim cannot be contingent upon the settling of other claims. The adjuster has not only a right but a duty to evaluate claims on their own merit and not the merit of another claim too. The adjuster must be given the opportunity to settle each claim individually for a specific amount within the policy limits.  This can put an attorney who represents multiple seriously injury parties from the same accident in a bad situation. It can cause a conflict of interest if he demands the full policy limit for one to the detriment of another.

What Happens if Multiple Parties Do Individual Stowers Demands?

When there are multiple parties, it often becomes a foot race to get your Stowers demand letter sent out first. When multiple parties have damages exceeding the policy limits, the adjusters’ duty is to evaluate each demand he receives on its own merit as he receives it. In a standard auto insurance policy where the limits are $30,000 per person up to a maximum of $60,000, the first two who send a valid Stowers demand letter may get all the money while the rest are left out in the cold. If they all send demands, the adjuster can choose to pay whichever he wants and still avoid any Stowers liability under the Supreme Court decision Texas Farmers Ins. Co. v. Soriano, 881 S.W.2d 312, 315 (Tex.1994).  This is why it is dangerous to delay in hiring an attorney and getting a Stowers demand letter done quickly in a multi-party serious injury case.

FAQs For Receiving a Stowers Demand Letter

What Should I Do If I Receive a Stowers Demand Letter?

Normally, Stowers demand letters are sent directly to your insurance carrier. If you receive a Stowers demand letter directly from another party or their attorney, you should contact your liability insurance company and provide them with a copy of the letter. As an insured, you have a duty to cooperate with your insurance company. Because Stowr’s demands are time-sensitive, failure to turn it over to your insurance company promptly could result in your case being prejudiced and coverage being withdrawn.

What Happens If Your Insurance Company Fails to Respond to a Stowers Demand Letter?

Failure to timely respond to a properly drafted Stowers demand letter exposes the insurance company to liability for any judgment taken at trial that exceeds the maximum limit of the applicable insurance policy. The purpose of a Stowers demand letter is to put the insurance company to a decision. They must choose between protecting their insured by paying the full amount of insurance coverage under the insurance policy or trying to save themselves money by taking the case to trial and convincing the jury to award less. If they make the latter choice, they are acting in their own best interest, not the clients best interest. This can open them up to liability to their client for negligence.

What Should I Do If My Insurance Company Tells Me They Received a Stowers Demand Letter?

When your insurance company receives a Stowers demand letter on someone’s behalf, they have a duty to disclose this to their insured and to let them know they have a right to speak to an independent lawyer of the insured’s own choosing. The most important thing the person can do to protect themselves is to send a letter expressing a desire for them to accept the settlement offer. It is wise to hire an attorney to draft this letter at a minimum in order to be sure the letter is done right.

Why Is My Defense Attorney Telling Me To Talk to Another Lawyer About a Stowers Demand Letter?

It is a conflict of interest for the lawyer provided by an insurance company to advise the insured about a Stowers demand letter. Because the insurance company is paying the insured’s defense attorney, that lawyer owes duties to both the insurer and the insured. A lawyer cannot advise one client to take legal actions that are to the detriment of another client. Thus, the lawyer cannot tell their client who was sued over a car accident that the insurance company is placing their interests above their interests by denying the settlement demand nor that there are steps the client can take to help shift the liability to the insurance company when their decision turns out to be wrong.

Does This Mean I No Longer Have a Defense Lawyer?

No. Both the insured and the insurance company win if the case goes to trial and the verdict comes out in the insured’s favor. Thus, the interests of the insured and the insurance company are aligned at trial and both can be represented by the same lawyer. However, if a Stowers demand was ignored, those interests will no longer align after trial if an excess judgment (judgment above the policy limits) is taken. Again, it is wise to consult your own personal injury lawyer to determine what steps to take.

What Happens If I Lose at Trial After Receiving a Stowers Demand?

A loss at trial means that the jury awarded the other side damages over and above the insured’s policy limits. If the other side sent a Stowers demand, the insured will now need to take the position that the insurance adjuster was negligent in not paying the claim and, therefore, should be liable. If they pay the full claim now, the case is settled. If they chose not to pay the full amount now, the insured can hire a lawyer to either:

  • sue the insurance company for negligent claims handling, or;
  • assign the insured’s rights to the plaintiff so that the plaintiff can sue the insurance company directly on behalf of the insured.

If you do not take one of the two above actions, the plaintiff can take steps to file a for a turnover order to ask the court to assign your interests to them or they can pursue collections against you directly.


Disclaimer: The information on this page is provided for educational purposes only and does not constitute legal advice or create any attorney-client relationship. Always talk to an attorney about your specific fact situation, especially if you are the one receiving the Stowers demand letter. Every case has it’s own nuances that may affect a Stowers demand letter and its validity.

Update published 5/2/2024




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Simmons and Fletcher, P.C., rooted in Christian values, exclusively handles personal injury cases, advocating for the rights of accident and negligence victims. Our Houston-based team, dedicated to compassion and excellence, handles cases across car accidents, motorcycle accidents, truck accidents, slip and falls, dog bites, and other types of cases with a commitment to personalized care. Upholding integrity and client-focused service, we strive for impactful legal outcomes. For a detailed understanding of our approach and team, visit our attorneys page.

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