Stowers Demand
Definition: A Stowers demand is a Texas settlement offer to a liability insurer for an amount within the policy limits, on terms a prudent insurer would accept. If the insurer unreasonably rejects it and a jury awards more, the insurer is liable for the excess judgment.
Also called: Stowers letter, policy limits demand, time-limited demand
What a Stowers demand means in Texas
A Stowers demand takes its name from G.A. Stowers Furniture Co. v. American Indemnity Co., a 1929 decision holding that a liability insurer owes its insured a duty of ordinary care in deciding whether to settle a claim within the policy limits. An insurer that gambles with the insured’s money by refusing a reasonable settlement, and then loses big at trial, must pay the whole judgment, not just the limits.
The Texas Supreme Court refined the test in American Physicians Insurance Exchange v. Garcia. The duty is triggered only when three things are true: the claim is within the scope of coverage, the demand is within the policy limits, and the terms are such that an ordinarily prudent insurer would accept, considering the likelihood and degree of the insured’s potential exposure to an excess judgment.
How it works in practice
A proper Stowers demand is specific. It offers to settle all claims against the insured for a stated amount at or below the limits, gives the insurer a reasonable time to respond, usually 30 days, and offers a full release of the insured. It attaches enough medical and liability evidence that the insurer can evaluate the claim.
If the insurer refuses and the case goes to verdict above the limits, the Stowers claim belongs to the insured, not the injured plaintiff.
Why it matters in your case
The Stowers doctrine is the main leverage an injured person has against a small policy. It converts a $30,000 limit into a potential liability for the entire verdict, which focuses an adjuster’s attention. We draft limits demands with the Garcia elements in mind so there is no later argument that the insurer was never properly put on notice.
Example
Felix suffers a traumatic brain injury when a driver with a $30,000 policy runs a stop sign in Pflugerville. His lawyer sends a Stowers demand for $30,000 with a 30-day deadline and complete records. The insurer counters at $18,000. At trial a Travis County jury awards $1.2 million. The driver assigns his Stowers claim to Felix, and the insurer now faces the full judgment.
Frequently asked questions
Who can sue the insurer for refusing a Stowers demand?
The insured, not the injured plaintiff. The Stowers duty runs from the insurer to its own policyholder. After an excess verdict, the policyholder either sues the insurer or assigns the claim to the plaintiff in exchange for an agreement not to collect the excess from the policyholder personally. Insurers often pay the excess to avoid that result.
Does a Stowers demand have to be for the full policy limits?
No. The demand must be within the limits, which includes any amount at or below them. Most demands ask for the full limits because the injuries exceed them. A demand for less than the limits can still trigger the duty if a prudent insurer would accept it given the insured's exposure.
How long should a Stowers demand give the insurer to respond?
Long enough to be reasonable. Texas courts have not set a fixed number, but 30 days is common and widely accepted. A deadline so short the insurer cannot evaluate the claim risks a finding that the demand never triggered the duty. The demand should also include the records needed to assess liability and damages.
Cite or link to this definition
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Citation
"Stowers Demand." Texas Legal Glossary, SMB Law, PC, law-smb.com/legal-glossary/stowers-demand/. Updated October 2026.Link HTML
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This entry explains Texas law in general terms and is not legal advice for any specific situation. Statutes and case law change; the date above reflects the last review.