Basics of the Texan Stowers Doctrine

South Texas College of Law alumnus Anastacio Mindiola has over a decade of litigation experience and has been a member of the State Bar of Texas since 2005. Anastacio Trae Mindiola operates a private law firm that focuses on insurance law and routinely prosecutes bad faith insurance claims on behalf of his clients.

The Stowers Doctrine is a complex aspect of bad faith insurance law that increases the amount an insurance company can pay if a claim is brought to trial and decided in favor of the plaintiff. In the 1929 G.A. Stowers Furniture Co. v. American Indemnity Co. case, the plaintiff offered to settle within the policy limit of $5,000. The company refused and after the case was tried, American Indeminity Co. was ordered to pay more than double the settlement offer. The plaintiff later sued the insurer for negligence for refusing to take the initial offer and ultimately won after a series of appeals.

Before the aforementioned case was decided by the Texas high court, insurance companies would only be responsible for paying out an amount up to the policy limit. This would disincentivize insurers from settling out of court. Today, the Stowers Doctrine is used by attorneys to convince insurers to pay appropriate claims or risk owing a much larger amount if the claim goes to trial.