Common Questions / Insurance Coverage
What are policy limits, and can I ever recover more than them?
Policy limits are the ceiling on what an insurer must pay for a claim, and in practice they cap most recoveries. But Texas's Stowers doctrine can shatter the ceiling: an insurer that unreasonably rejects a proper within-limits demand can become liable for the entire judgment, even far above the policy.
The ceiling on the case
Every liability policy states the most the insurer will pay: per person, per occurrence. Texas requires drivers to carry only 30/60/25, thirty thousand dollars per injured person, and serious injuries dwarf those numbers routinely. Since a defendant beyond the policy is usually collection-proof, the practical recovery in most cases is bounded by the coverage found. That is why the first real work in a serious case is a coverage hunt: the defendant's policy, umbrella and excess layers, employer policies if the driver was working, and your own UM/UIM coverage stacked on top. Cases are lost not only on liability but on policies never found.
Stowers: the doctrine that breaks the ceiling
For nearly a century, Texas law has imposed a duty on liability insurers: when a claimant makes a proper settlement demand within policy limits that a reasonably prudent insurer would accept given the risk of an excess judgment, the insurer must accept it. Refuse unreasonably, and the insurer, not just its insured, can be held liable for the entire judgment that follows, including every dollar above the limits. The doctrine exists because the insurer controls the defense while gambling with its insured's assets, and Texas decided the gambler should own the loss.
Why the demand letter is a loaded instrument
A Stowers demand only works if it is built correctly: an unconditional offer to fully release the insured, within the limits, held open a reasonable time, delivered when liability and damages are documented well enough that rejection is unreasonable. Which means the demand is not correspondence, it is trial preparation compressed into a deadline: the liability evidence, the medical proof, and the damages picture assembled so completely that the carrier's own file screams accept. Done right, it produces either the limits or the leverage. This firm has taken a case through verdict to a recovery exceeding the defendant's policy limits after a timely demand was refused, and carriers remember which firms can do that.
What this means for you
Never assume the visible policy is the whole coverage, never let an adjuster tell you what the limits are without the sworn disclosure litigation can force, and understand that a low policy is the beginning of the analysis, not the end. The consultation that maps the coverage costs nothing, and it is where more than one small-looking case has turned out large.
Injured in Arizona? Some rules on this page are Texas-specific. Arizona differs on points that change outcomes, including pure comparative fault and government-claim deadlines. See our Arizona answers or call (888) 508-6967.
Related: Uninsured & Underinsured Drivers · Will My Case Go to Trial? · Submit Your Case · All Common Questions
This page is general information about Texas law, not legal advice about your specific situation. Deadlines and outcomes depend on facts; talk to a lawyer about yours.
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