Automobile insurance companies make vast sums of money by charging high premiums, then delaying, lowballing or denying collision claims. State Farm has a staggering net worth of $87.6 billion. It paid its CEO $8 million last year. Its new regional headquarters in North Dallas cost over $500 million and will employ over 8,000 people. But just try to pry money from an adjuster’s hands without a tough fight – and a good lawyer.
What is one good way to make these companies pay you a fair amount of money after you’ve been crashed into by one of their lousy drivers?
One tool injury lawyers employ in Texas is the Stowers demand. Used properly, it forces automobile insurance companies to engage in good faith negotiations and pay off large trial judgments.
The Stowers doctrine dates back to a 1929 Texas Supreme Court decision in G.A. Stowers Furniture Co. vs. American Indemnity Co. when the court provided injured people a more level playing field.
Before then, an insurance company could just deny a claim. And if the injured person sued its driver, the company was willing to take its chances in court where it hoped to win the case or minimize the size of the verdict. If it lost, it would simply pay off the judgment after several years without penalty or pressure.
So how does the Stowers doctrine help you?
The Landmark Case
Way back in 1920, a Stowers Furniture Company driver left a disabled truck on the side of the road in Houston without lights on. An hour later, a woman crashed her vehicle into the truck and was seriously injured.
She sued the company for $20,000 but later offered to settle her claim for $4,000. The furniture company’s liability carrier refused to pay more than $2,500, despite the clear liability, substantial damages, and $5,000 insurance policy limit. The woman recovered $14,107 after a trial and appeal.
The furniture store owners believed its insurance company should be responsible for the total judgment and sued it. The Texas Supreme Court agreed. The court directed the carrier to pay the entire verdict, ruling that it should be held to “that degree of care and diligence which an ordinarily prudent person would exercise in the management of his own business.” This forever changed insurance negotiations in Texas for the better.
How We Use the Stowers Demand
The Stowers doctrine is not a magic wand, however. An injury attorney cannot just make an unsubstantiated demand, since the liability carrier is only required to make a reasonable effort to settle. So from the first day, we meet with our clients, honestly appraise their damages, explore all possible sources of money to recoup, advise them how theycan recover from their injuries, and work with them and their doctors.
We diligently gather all the evidence we need to make sure the other driver’s insurance carrier has all the facts and figures it needs to support our demand for policy limits or reasonable offer of settlement. Photographs and maps of the scene, police reports, witness statements, photographs of the vehicles, medical reports, medical bills (which we painstakingly go through to see if health insurance benefits are mentioned, which lower the value of the case), affidavits, lost wage forms and other data are included. We build an extensive file that cannot be refuted and if the offer is unreasonable, we’re ready for court.
The Stowers demand letter that we also send with this documentation — after first discussing it with our clients and getting their approval — offers to settle a claim for the policy limit available.
Before the demand can be considered, the carrier will require that the following conditions are met:
- Liability must be clear against its insured driver;
- The amount of money demanded must be less than or equal to the limits of the insurance policy;
- The demand must be so clear than a reasonable insurance company would accept the amount demanded;
- The demand must not have any conditions; and
- The demand must agree to give the company a full release and pay all outstanding liens and claims
The insurance company has a reasonable amount of time of at least 15 days (and possibly more depending on the case) to respond to the demand. An insurance company that rejects a proven settlement offer within the policy limits risks having to pay a significantly higher jury verdict. This is a powerful incentive to force it to make a reasonable offer of settlement.
The Stowers demand also protects the injured person from an insolvent judgment holder. Most individuals and some companies do not have the assets and income to pay high damages that exceed their insurance policies. An insurance company does, however, have the funds to pay the injured person. As a result, you can take your claim to trial without as many concerns about whether the judgment will ultimately be paid.
Earlier today I met with a young man who broke his leg in a motorcycle crash after a woman claimed she fell asleep at the wheel — at 8:00 o’clock a.m. — and crashed into him to review his demand package.
And I am about to meet two injured people to explain this involved process and help get them on the path to recovery, late on a Friday afternoon.
Please call my office at 817-885-8000 or toll-free at 1-888-801-8585 if you have any questions.