Thursday, July 24, 2014

In this eight-post series, we are examining the most common “Stowers myths” that sometimes confuse the practical application of an insurance company’s duty to behave in a reasonably prudent manner in responding to settlement demands.  If you are new to the series, you may want to start here, at the beginning, to learn more about the basic parameters of the Stowers doctrine. 

MYTH #2    The settlement demand must be in writing to trigger the insurer’s duty to settle.

Quite simply, no Texas court has required that a settlement demand must be in writing to trigger an insurer’s common-law obligations under Stowers.  To support a Stowers claim premised on an oral settlement demand, the testimony of the insured, defense counsel, or other witnesses may provide evidence proving the terms and conditions of the demand, including the amount of the demand and the release offered in exchange for the settlement payment. While the absence of a writing is not fatal to a Stowers claim, a written settlement demand can eliminate disputes or uncertainty regarding the terms of the demand and is the better practice, if feasible under the circumstances.

If you have questions regarding the Stowers doctrine or if you need assistance in securing an insurer’s participation in a settlement, contact us.  Dana Harbin, Tarron Gartner-Ilai, and Amy Elizabeth Stewart contributed to this post.

The next post in this series is “Myth #3    The insured can make a Stowers demand that triggers the insurer’s duty to settle.”  Stay tuned!