So you just got into a wreck. Another driver was not paying attention and slammed into the back of your car. You feel sore all over, but there is more. Your neck has a sharp, shooting pain that is not alleviated by any over-the-counter medications. You do everything right: (1) you hire an attorney; (2) you document everything; and (3) you start seeing some doctors and you are told that the cost to get you back to baseline will be well in excess of $50,000. Your attorney sends a demand to the insurance company for the full payment of their policy limits. Instead of doing the right thing, the insurance company decides to give you the run around and not pay. Worse yet, you find out there is only $30,000 in liability insurance on the other side. So – are you out of luck completely?

The short answer to that is not yet. If your attorney knows what they are doing, they would have sent what is called a Stowers demand. Simply put, a Stowers demand puts the insurance company in box. On one hand, they can pay out their policy limits. This is not something insurance companies would like to do as they would rather deny, defend, and delay any claim possible. On the other hand, they risk having to pay any excess over the policy limits if awarded by a jury. Seeing as how an insurance company typically only has to pay up to their limits, this puts more of their money at risk.

The Stowers doctrine comes from a case in the 1920’s titled G.A. Stowers Furniture v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929, holding approved) (emphasis supplied). Cutting through the legal jargon of the 1920’s case, the Court held that if an insurance company has the duty to defend against a lawsuit, if the injured party sends a demand within the policy limits and the insurance company does not pay the demand then they open themselves up to a potential claim by their insured for negligently handling their claim in the amount of the excess verdict.

A couple of things to note about this decision: (1) the demand has to include a complete release of all claims against the Defendant; (2) the insurance company is only on the hook if it is a reasonable demand that a typical insurance company should pay; and (3) in practice, the claim against the insurance company is held by the defendant.

1. A Complete Release

Any demand that hopes to use the Stowers doctrine must include a complete release of all claims against the Defendant. What this means is that you cannot say I will release a claim for loss of earning capacity in exchange for payment while keeping the claim for payment of medical expenses.

The Texas Supreme Court has held in follow up cases regarding the Stowers doctrine that a complete release includes the release of all hospital liens as well. A hospital lien is a lien that a hospital can put on your claim typically in order to ensure payment of emergency services. As the hospital can potentially go after the insurance company for payment without protecting the lien, the injured party must include language that any hospital liens will be paid out of the demand money.

2. The Demand Must Be Reasonable

Let’s consider two hypotheticals. First, a person is rear ended by a semi-truck and thankfully they are not injured. The only treatment done is to go to the emergency room to make sure everything is alright. The person then hires an attorney to represent them and the attorney sends a $10 million demand with only $5,000 in damages.

Second, let’s say a person is rear-ended by a driver carrying only the state minimum amount of insurance: $30,000. The injured person is care-flighted to a hospital where they will have to undergo surgery and months of physical therapy. The person hires an attorney who sends a policy limits demand.

In which of the two situations would it be reasonable to pay the demand?

The answer is clearly the second. If the insurance company in the second situation does not pay the second demand, they are clearly willing to risk significant exposure over the policy limits in defending the case. In the first situation, it would be unreasonable for an insurance company to pay $10 million to a person who is not injured.

The difficult part in determining real life scenarios is that they are typically not as obvious as the above stated situations. Hiring an experienced lawyer like the Travis Heller of the Heller Law Firm to look at your case would be beneficial to make sure that you are making the best decision for your situation.

3. Application in Real Life

Alright. You have presented the insurance company with a reasonable demand which they should accept. However, for whatever reason, the insurance company refuses to pay your demand. Where do you go from here?

At this point, a couple of things can happen. One, you may continue to a trial. This can be a multi-year process and is not guaranteed as one can never know for sure how a jury will decide. Two, you may continue to negotiate with the insurance company and try to get a settlement above policy limits.

If you do decide to continue to trial and a jury awards you more than the policy limits, you can then apply for a turnover order from the Court so that you can start the second lawsuit against the insurance company directly.

If all of this feels like a firehose of information, please know there is so much more detail and nuance that is not here. All of these steps require attention to detail and a forward-thinking plan. In order to best take care of your case, you will need someone like Travis Heller of the Heller Law Office. He has experience with multiple cases in getting resolutions far above the policy limits. Call now for a free consultation and let him review your case to see what he can do to help!

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Travis Heller, a dedicated personal injury lawyer since 2016, has championed for hundreds of clients, recovering millions of dollars in compensation. Drawing from his past experience as an Infantry team leader in the National Guard, Heller employs a teamwork-focused approach in his relentless pursuit of justice. Beyond his practice, he has served in key roles with the Texas Young Lawyers Association and the Tarrant County Trial Lawyers Association and is a published contributor to the Savannah Law Review.

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