Texas insurance laws often times require that the insurance company issueing a policy, sell certain types of insurance with at least a minimal amount of coverage. The situation most people are familiar with is that related to automobile insurance coverage. In Texas, according to Texas Transportation Code, Section 601.072, a person cannot legally drive a car unless they have at least $25,000 worth of liabilty coverage. Texas Transportation Code, Section 643.101 requires a minimum amount for tow trucks, Section 643.1015 requires a minimum for school buses, and throughout the Texas Insurance Code and the Texas Transportation Code minimal required limits are spelled out depending on the vehicle driven.
Other types of insurance may have minimums or caps that are required. In other situations, there may not be a minimum that is required by law, rather there is a minimum that is purchased by the person seeking the insurance. These other types of insurance could be homeowners policies, commercial policies, medical malpractice policies, and many others.
What happens if a person’s losses exceed the minimum the insurance company is required to pay? There are three main options here. The first is to accept the amount the insurance company actually has to pay and walk away. The second is to accept what the insurance company actually has to pay and then pursue the individual or company who is insured for the differerence still owing. This is usually (not always) futile in that the individual or company does not have any assets worth seizing to satisfy a judgment beyond what the insurance company pays. The third is one where you would be required to have an experienced Insurance Law Attorney.
This third option comes into play when presented with a “Stowers” situation. Briefly, a Stowers situation is where the insurance company is given the chance to settle the claim for an amount equal to or less that the policy limits. When the insurance company refuses to pay a reason demand that is equal to or less than the policy limits then the insurance company could be subjected to a situation where they have to pay more than the policy limits.
For a Stowers demand to pay, to be proper and legal, there are certain requirements that must be met. These requirements were discussed in the Texas Supreme Court case, Trinity Universal Insurance Company v. Bleeker. This case requires certain wording regarding releases and certain time frames within which to operate and investigate and accept the claim being made. These requirement have changed over time from that which was required in the original Stowers case. Only an experienced Insurance Law Attorney is going to be aware of these changes. In the proper case, where a Stowers demand was made and rejected, an injured party can recover from the liability insurance company an amount way over the actual amount of insurance coverage.