Frequently Asked Questions (FAQ) For Stowers Demand Letters & Insurance Bad Faith Claims (Texas)

 

Frequently Asked Questions (FAQ)

For Stowers Demand Letters & Insurance Bad Faith Claims (Texas)

🔶 1. What is a Stowers Demand Letter?

A Stowers Demand Letter is a formal, time-limited settlement offer sent to an insurance company. It requires them to settle a valid claim within the insured’s policy limits or risk liability for the full amount of any court judgment—even above policy limits—if they unreasonably refuse.

---

🔶 2. What makes a Stowers Demand valid?

To be legally effective under Texas law, your Stowers Demand must:
✔️ Clearly state liability is reasonably certain
✔️ Offer to settle within policy limits
✔️ Include an offer of full and final release for the insured
✔️ Set a specific deadline (usually 10–14 days)
✔️ Be delivered properly (certified mail or confirmed receipt)
✔️ Include supporting evidence (police reports, bills, witness statements)

---

🔶 3. What if the insurer ignores my Stowers Demand Letter?

If the insurer ignores or unreasonably rejects your demand:
✔️ They may become liable for damages exceeding policy limits.
✔️ You can file a complaint with the Texas Department of Insurance (TDI).
✔️ You may sue for bad faith/unfair settlement practices under Texas Insurance Code § 541.060.
✔️ If the matter proceeds to court and the judgment exceeds policy limits, you may hold the insurer responsible.

---

🔶 4. Do I need a lawyer to send a Stowers Demand Letter?

No—Texas law does not require an attorney to send a valid Stowers Demand.
However, you may choose to hire one if:
✔️ The case involves complex liability issues;
✔️ The insurer heavily disputes fault;
✔️ You plan to sue for bad faith if they deny the demand.

⚠️ Tip: Even if self-represented, make sure to follow the legal checklist carefully.

---

🔶 5. Can I file a TDI complaint myself?

Yes. You can submit a free complaint with the Texas Department of Insurance if:
✔️ The insurer delays or denies your claim unfairly;
✔️ You suspect violation of Texas Insurance Code § 541.060;
✔️ You received no valid reason for a denial or low offer.

TDI may investigate or pressure the insurer to respond properly.

---

🔶 6. How long should I give the insurer to respond?

Texas law does not set a fixed deadline, but most Stowers demands set a 10 to 14-day deadline. It must be “reasonable” under the circumstances, giving the insurer time to fairly investigate and respond.

---

🔶 7. What happens if the insurer accepts my Stowers demand?

If accepted:
✔️ You receive the settlement amount requested;
✔️ You must sign a full release of the insured (no future claims for this incident);
✔️ The claim is resolved without trial.

---

🔶 8. What if the insurer offers less than my demand?

✔️ You may reject the offer;
✔️ You can proceed to trial and later hold them liable for excess judgments;
✔️ This could strengthen a future bad faith claim if the refusal was unreasonable.

---

🔶 9. Will the insured (person at fault) be affected?

✔️ The Stowers Doctrine is designed to protect the insured by forcing the insurer to settle when possible;
✔️ If the insurer refuses a reasonable demand, they (not the insured) could be liable for any court judgment above the policy limits.

---

🔶 10. What damages can I recover if I sue for bad faith under Texas Insurance Code § 541.060?

✔️ Actual damages (financial harm from delays or denial);
✔️ Mental anguish damages (if proven);
✔️ Treble damages (if insurer knowingly violated the law);
✔️ Attorneys’ fees and court costs.

---

🔶 11. What evidence should I keep to protect my rights?

✔️ Copies of your demand letter;
✔️ Proof of delivery (Certified Mail receipts, emails);
✔️ Denial letters or settlement offers;
✔️ Claim-related documents (medical bills, repair estimates, police reports);
✔️ Notes or logs of all phone calls or conversations with the insurer.

---

🔶 12. Can I use this process for first-party claims (like my own home or health insurance)?

No. The Stowers Doctrine applies only to third-party liability claims—for example, when you are harmed by someone else’s negligence and claim against their insurance.

For your own policies (first-party), other legal protections apply, like Texas Insurance Code Chapter 542 (Prompt Payment of Claims).

---

🔶 Still Have Questions?

✔️ Book a 1-on-1 Compliance Review Session for personalized help.

✔️ Contact Resolution Power Co. at https://resolutionpower.co/book-a-call.