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What Every Adjuster Should Know: The Stowers Doctrine

On Behalf of | Mar 8, 2013 | Firm News

Most claims professionals have heard of a Stowers demand, or received a Stowers letter. The Stowers doctrine is a widely mentioned, but commonly misapplied, tool in a Plaintiff attorney’s arsenal to force settlement. It is crucial for an adjuster to fully understand the doctrine, and the obligations derived from it.

The Stowers doctrine is a judge-made law that places a responsibility on an insurance carrier to exercise reasonable care in responding to settlement demands made within policy limits. The intent behind the doctrine is to protect defendants from personal liability when an insurance carrier has contracted to maintain control of any legal defense related to their policy. If an insurer rejects an offer that is within policy limits without exercising reasonable care, the insured can make a claim against the insurer for the excess judgment over their policy limits.

For example: Your insured has a $30,000/$60,000 policy. They get into an accident. The Police report says the Claimant is at fault. A lawsuit is filed. Plaintiff’s counsel sends a demand letter for $10,000 and gives you two weeks to respond. You think this is a winnable case, and you’re tempted to take it to trial. Have you been put in a Stowers situation?

Next week, we’ll look at the elements of a proper Stowers demand.


1. Whenever you receive a demand letter, ask your attorney if it constitutes a valid demand under the Stowers doctrine.

2. Be conscious that the law in Texas ascribes a duty to insurer. Make sure that decisions regarding settlement demands are defendable.

3. Keep meticulous records of all demand letters, even after the conclusion of the litigation.


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