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The Stowers Doctrine — Insurer Bad Faith in Texas

The Stowers doctrine makes a liability insurer responsible for the entire judgment — even the part above the policy limits — when it unreasonably refuses a settlement demand within those limits that an ordinarily prudent insurer would have accepted. It is the main tool for holding insurers accountable when they gamble with a policyholder's exposure.

Last reviewed: June 5, 2026

When an insurer plays hardball on a clearly valid claim, the Stowers doctrine shifts the risk of that gamble back onto the insurer.

The rule

From G.A. Stowers Furniture Co. v. American Indemnity Co. (Tex. 1929): a liability insurer has a duty to accept a reasonable settlement demand within policy limits when an ordinarily prudent insurer would do so. If it unreasonably refuses and the case later results in a judgment above the limits, the insurer is liable for the entire excess — not just the policy amount.

Why it shapes negotiations

A valid “Stowers demand” — a within-limits settlement offer that meets the doctrine’s requirements — forces the insurer to choose between settling and exposing itself to the full verdict. Framed correctly, it changes how seriously an insurer treats the claim.

Structuring a Stowers demand so it actually triggers the doctrine is precise work. A Texas injury lawyer sets it up when the facts support it.

Frequently Asked Questions

What is a Stowers demand?
It is a settlement demand within the at-fault party's policy limits that, if reasonable, the insurer must accept. If the insurer unreasonably rejects it and a jury later returns a verdict above the limits, the insurer can be liable for the entire excess under the Stowers doctrine.
Why does the Stowers doctrine matter to an injured person?
It pressures insurers to settle reasonable claims within limits rather than risk paying the full verdict. A properly framed Stowers demand can change how an insurer values your case.

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