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An overview of the Stowers doctrine, and how it impacts Texas personal injury cases:

When you’ve been practicing personal injury law for 25 years, you learn a lot about how insurance works. This is because the vast majority of individuals and corporations that we sue simply don’t have the assets available to cover the costs of our clients’ damages, but they often have insurance policies we can go after. Here, we’re going to discuss the basics of how the so-called “Stowers doctrine” works, and what it means for you.


Questions Answered on This Page:

  • What is the Stowers doctrine?
  • How does the Stowers doctrine work in personal injury cases?
  • How does the Stowers doctrine impact Texas personal injury claims?

How the Stowers doctrine holds insurance companies liable.

As we often remind clients and the general public, insurance companies have no legal obligation to automatically pay victims. This is because the policies they write for their customers (called “insureds”) are only for instances in which their insureds negligently cause someone to be hurt or killed. Since negligence is such a broad concept, the insurance company can simply hide behind allegations that you or another party other than their insured is responsible. These policies also have “limits,” meaning that the insurance company is only agreeing to be financially liable for a set amount prior to any accident ever happening. In other words, the company’s exposure is capped at whatever limits its policy states.

In addition to that advantage, the insurance company knows that if they roll the dice and go to trial, they’ve always got a chance of winning. At worst, they’d simply have to pay the policy’s limits anyhow. As such, they have little incentive to settle for an appropriate amount.

Understanding this, the Texas Supreme Court tried to level the playing field about 90 years ago. In G.A. Stowers Furniture Co. v. American Indemnity Co., the Texas high court decided that insurance companies have a duty to offer to settle cases within policy limits when a reasonable settlement offer has been made. When the insurance company refuses a reasonable settlement offer, what happens? Well, if the case goes to trial, the insurance company is on the hook for not only for the policy limits it had previously agree to insure its insured, but any extra money the jury awards over and above that.

At its core, Stowers tells the insurance company to accept a reasonable offer. If they don’t and the case goes to a jury trial, the insurance company is financially responsible for whatever the jury decides. Let’s use an example of a trucking accident case where the policy has $1,000,000 limits. The case goes to trial and the jury awards $2,000,000. Here’s what happens under Stowers: if the plaintiff HAD made a reasonable offer to settle within policy limits and the insurance company refused, the company owes the plaintiff $2,000,000; if the plaintiff HAD NOT, the insurance company only owes its policy limits of $1,000,000.

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How a Stowers demand impacts a settlement.

If you hire an unreasonable attorney, then Stowers is essentially useless. Many plaintiff attorneys will make outlandish settlement demands and presume that Stowers provides some invisible teeth. But Stowers demands insurance companies only to accept “reasonable settlement offers within policy limits.” In other words, for this to work, your lawyer will need to be able to do two key things:

  • Honestly evaluate your case: We know you’ve been through a lot and that no amount of money can ever bring back the misery and suffering you’ve endured. But juries only award so much for each case. If your attorney sends the defendant and its insurance company an absurdly high number for settlement, then even if a jury later awards well in excess of the policy limits, a court will likely not award you the extra money.
  • Work your case hard to prove its value: The insurance company must be in possession of facts, evidence, and figures sufficient to apprise them that your case deserves to be settled at all. A court will later be placed into the insurance company’s shoes to decide whether or not the company should have taken reasonable steps to settle your case.

Give Grossman Law Offices a Call:

If you don’t have an attorney on your side who has done this over and over for many years, it’s time you called Grossman Law Offices at (855) 326-0000 now for help.


Other articles about personal injury cases that may be helpful:

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