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Some FAQs Regarding Insurance Arbitration

Friday, December, 28, 2012


Choosing arbitration as a form of Alternative Dispute Resolution (ADR) to resolve your car insurance dispute is a wise choice in many cases, particularly concerning car accidents in which the insurance company doesn’t want to pay the money that is entitled to you.  Not only does arbitration save both parties involved a lot of time and money versus taking a case through litigation, the decision of the arbitrator is legally binding and has the same amount of legal weight a judge’s decision would have if you had taken the case to court. 

Is my insurance company required to agree to arbitration?

For the reasons listed above, insurance companies are usually much more agreeable to the idea of arbitration than they are to mediation, or other forms of ADR.  Additionally, arbitration guarantees privacy for both parties, which is usually of utmost importance to a company attempting to maintain its positive brand image.  However, it is important to know that unless you signed an arbitration agreement in an arbitration clause when you entered into contract with the insurance company, neither you nor the insurance company is legally required arbitrate an insurance dispute. 

Who will be arbitrating the case?

Insurance arbitration is usually facilitated by a retired judge or experienced lawyer who is familiar with all aspects of insurance law.  Finding an arbitrator who is experienced and who has a reputation for fairness is a must, especially if you feel that the insurance company is going to be difficult in the process by bringing their own team of high-powered attorneys to the proceedings. 

Is the decision of the arbitrator final?

Yes, the arbitrator’s decision will be legally binding and will be upheld by the courts.  This is why you should make sure that when you meet with the arbitrator for the hearing, you bring all documents and evidence supporting your case, including witnesses, your copy of the insurance documents, any police statements and your payment records. 

What is a “high-low” agreement?

Many insurance companies will require you to sign a “high-low” agreement before they will enter into arbitration.  This means that there are established minimum and maximum payouts that the insurance company will pay, regardless of the arbitrator’s decision.  If your “high-low” agreement with the insurance company is “$2,000 and $10,000,” this means that even if the arbitrator only awards you $500, the insurance company will be required to pay you $2,000.  Or, if the arbitrator awards you $20,000, the insurance company will only be required to pay $10,000 of that amount.