Making a “Stower’s Demand” under the “Stower’s Doctrine” is the process by which a plaintiff’s attorney can potentially force a defendant’s insurance company into a position where they have to either agree to a settlement or potentially be on the hook for a judgment even if it is above the policy limits.
There are four requirements for a valid Stower’s demand:
- The plaintiff’s claim against the defendant’s insured must be for something for which the defendant has insurance coverage,
- The settlement offer must be within the policy limits or, in the alternative, be for “the policy limits”,
- The offer must result in a full release and
- The settlement proposal must be such that an ordinary, prudent insurer would have accepted it, taking into consideration the likelihood and degree of the potential exposure to the insured to a judgment beyond the limits of the policy.
Technically speaking, even if an insurer rejects a “Stower’s Demand” that insurer could still dispute the fact that a “reasonable insurer” would have taken it. However, a jury has already determined that the value of the case was more than the offer that the defense rejected. Under that circumstance, it is generally in the insurer’s interest to reimburse their insured. It is conceivable that an insurer could argue that the rejection of the offer was reasonable if the award was not considerably more than the offer or if there is some sort of other unusual situation that would justify making the argument.
Generally speaking, Stower’s demands arise in the context of many car accident cases. Stower’s demands can also be made in wrongful death cases or business cases. Whether or not to make a Stower’s demand is an important consideration in most cases where an insurer is representing a third party. When making a Stower’s demand it is important to make sure that all the formalities are followed to ensure that it will bind the insurance company when the case is finished.