If you've been in an auto accident and your insurance claim has been denied or the settlement offer is much lower than you think you deserve, arbitration may be the next step in your case. Below is a basic outline of arbitration, when it's generally pursued, and the benefits you can see as a participant of arbitration.
What is Arbitration and How is it Different from Mediation?
Arbitration can occur when two parties (yourself and your car insurance company) cannot come to a settlement agreement. This can occur for a number of reasons, but usually has to do with different ideas on the value of the damaged property (car) or different ideas of how much of a settlement you actually deserve under your policy.
While mediation can be helpful, assuming both parties are flexible, arbitration is more commonly encouraged because there is always an outcome – a settlement is always reached during arbitration, and this is the ultimate goal of both parties. Mediation, on the other hand, is used as more of a conversation starter and only results in an outcome if both parties reach one together.
When is Arbitration Pursued?
If arbitration is mentioned as a clause in your auto insurance contract, it may be a required form of settlement between yourself and the insurance company.
Arbitration clauses exist as a way to avoid lawsuits as they're expensive and can be quite time consuming. Arbitration, on the other hand, is a quick and much cheaper method of settling. If the arbitration clause in your contract mentions that it is voluntary as opposed to mandated, or arbitration is not listed at all, you may be able to consider other settlement options, such as mediation or small claims court. Otherwise, arbitration may be a mandatory part of the settlement process and may not be able to be avoided.
What are the Benefits of Arbitration?
One of the biggest benefits when it comes to arbitration is the guaranteed settlement – the time and money being spent on this case won't end up as a huge loss, as it might in mediation.
In general, arbitration is a fair, speedy, and final settlement alternative to mediation and litigation. While it may not be right for every situation, it isn't the worst option for those with valid insurance claims. If the arbitration clause in your contract is voluntary, or arbitration is not mentioned at all, you have more flexibility when it comes to deciding whether arbitration is right for you, but even if arbitration is mandated, it can still offer you the quick and unbiased ruling you need to win your settlement.
To learn more about arbitration and whether it's a mandatory part of your auto insurance contract, consult with your auto insurance agent. If arbitration is voluntary or not mentioned within your contract at all, you may want to consult with an insurance law attorney to determine whether arbitration would be worth pursuing as well as get an idea of your other options.Share