What is the 'Stowers Doctrine' (or its equivalent in other states)?

The Stowers Doctrine (Texas) and its equivalents in other states (e.g., Cantanese in Pennsylvania, Crisci in California) establish that an insurer can be liable for damages exceeding the policy limit if it acts in bad faith by refusing to settle a third-party claim within policy limits. The classic scenario: (1) The insured's auto policy has $100,000 limits; (2) The insured causes a serious accident with clear liability and $500,000 in damages; (3) The injured party offers to settle for $100,000 (the policy limit); (4) The insurer refuses to settle, gambles on a lower verdict or hopes to win at trial; (5) The jury awards $500,000; (6) The insured is now personally liable for $400,000 above the policy limits; (7) Under Stowers, the insurer is liable for the $400,000 excess because it acted in bad faith by not protecting the insured's interests. The doctrine requires: clear liability of the insured; damages potentially exceeding limits; an opportunity to settle within limits; the insurer's refusal to settle. The insurer's duty is to give equal consideration to the insured's interest, not just its own. Stowers claims are pursued by the insured (often after the underlying judgment); some states allow direct claims by injured parties via assignment. The doctrine creates strong incentive for insurers to settle when limits are clearly inadequate.