How to Fight Insurance Bad Faith Denials Using the Stowers Doctrine
Introduction
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Briefly define "Insurance Bad Faith" and why it matters for small service providers.
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Explain the Stowers Doctrine (in simple terms):
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Texas law principle holding insurers liable for failing to settle claims reasonably within policy limits.
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State the goal: to help overwhelmed businesses fight unfair claim denials without expensive legal help.
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Promise: "Includes ready-to-use templates and timeline guidance."
Step 1: Assess Your Denial for "Bad Faith" Indicators
✔️ Review your denial letter for these red flags:
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Vague or incomplete explanations.
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Unreasonable delay in response.
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Ignored settlement offers.
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Denial despite clear liability evidence.
✔️ Check if:
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You or your client made a valid, timely claim.
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The insurer refused a reasonable settlement demand within policy limits.
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There’s financial harm resulting from the insurer's failure.
🔍 Tip Box: “If you’re unsure—call or email the adjuster for a denial clarification in writing.”
Step 2: Send a Notice Letter (Stowers Demand Template)
✔️ Prepare a Stowers Demand Letter including:
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Policy details.
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Clear settlement demand within limits.
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Deadline for insurer to respond (typically 10-14 days).
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Reference to the Stowers Doctrine and potential exposure.
✔️ Provide a Template
(Include a copy-paste ready “Stowers Demand Letter” template right here for readers.)
Step 3: Track Legal Timelines
✔️ Critical Deadlines (Texas example):
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Stowers demand response window: 10-14 days (varies by case).
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State statute of limitations for bad faith action: usually 2 years from denial (check local laws).
✔️ Maintain a compliance calendar:
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Record when you sent the letter.
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Track insurer response dates.
📅 Downloadable Timeline Checklist PDF (Optional Lead Magnet)
Step 4: Escalate or Pursue Legal Action (if needed)
✔️ Options if insurer ignores or refuses reasonable demand:
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File a Texas Insurance Code § 541.060 claim (Unfair Settlement Practices).
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Seek legal help (if damages exceed small claims limits).
✔️ Explain when to:
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Send a Texas Department of Insurance (TDI) complaint.
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Consider litigation (with legal aid or pro bono support).
🔶 Bonus: What is NOT Covered by Stowers Doctrine?
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Clarify: Stowers applies to liability claims against insured parties—not to all coverage disputes (like property or health denials).
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Examples of when Stowers doesn’t apply to prevent misuse.
1. First-Party Claims
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Stowers only applies to third-party liability claims, not first-party insurance disputes.
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Doesn’t apply if:
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You file a claim on your own property, health, or auto policy.
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Example: A homeowner filing a claim with their own insurer for roof damage.
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✔️ Use other remedies like Texas Insurance Code Chapter 541 (Unfair Settlement Practices) instead.
2. No Settlement Demand Was Made
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The Stowers Doctrine is triggered only if a valid, time-limited settlement demand was presented.
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Doesn’t apply if:
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The injured party never made a formal settlement offer within policy limits.
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✔️ The insured (or their legal counsel) must have submitted this demand to activate Stowers duties.
3. Demand Exceeds Policy Limits
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Stowers only protects the insured when a settlement demand is within policy limits.
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Doesn’t apply if:
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The plaintiff’s demand exceeds what the insurer is contractually required to pay.
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✔️ If a $100,000 policy is in place, but the demand is $200,000—Stowers does not apply.
4. Claims Outside of Covered Policy Risks
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Stowers only applies to claims actually covered under the insurance policy.
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Doesn’t apply if:
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The type of claim is not covered (e.g., intentional acts, excluded risks).
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✔️ Example: Insurer denies coverage for a criminal act excluded by the policy — no Stowers duty.
5. No Clear Liability or Coverage Dispute Exists
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Stowers requires clear liability on the insured’s part for triggering obligations.
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Doesn’t apply if:
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Liability is disputed, unclear, or defensible.
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✔️ If reasonable doubt exists about who is at fault, the insurer has more leeway to deny settlement.
6. Settlement Offer Did Not Include Proper Terms
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The demand must meet all Stowers demand requirements:
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Reasonable offer
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Within policy limits
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Clear liability proof
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Demand for full release of the insured
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Doesn’t apply if:
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Demand letter was vague, missed critical legal elements, or failed to offer a full release.
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✔️ Poorly written demand letters can invalidate Stowers applicability.
🔶 Summary Chart: When Stowers Doesn't Apply
| Situation | Why Stowers Does Not Apply |
|---|---|
| First-party coverage disputes | Stowers only covers third-party liability claims |
| No formal time-limited settlement demand made | Demand letter triggers Stowers duties |
| Demand exceeds insurance policy limits | Insurer can’t be forced to settle beyond coverage |
| Claim not covered under policy | Stowers applies only to covered risks |
| Liability not reasonably clear | Disputed liability allows insurer discretion |
| Defective or incomplete settlement demand letter | Must meet strict Stowers demand standards |
🔶 Conclusion: Empowerment, Not Intimidation
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Recap: You have rights. Insurers must act fairly.
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Reassure: You can start with these templates, build evidence, and escalate when needed.
✔️ Offered Download:
✅ "Stowers Demand Letter Kit" (PDF with templates + checklist)
https://docs.google.com/document/d/1mzyDoGRYNPDftZZkY2sUX15ZNj1p_VCkb1EvRNWqmXw/edit?usp=drive_link
✅ Invite for 1-on-1 compliance review session (paid service).
https://resolutionpower.co/book-a-call
🔶 Other Sections:
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FAQ (e.g. "What if the insurer ignores me?" / "Do I need a lawyer to send this letter?")
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Success Story (short client example—anonymous)
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Call to Action:
"Need help drafting your own demand letter? Book a session with us."
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