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Arbitration for Car Insurance Claims

Arbitration for car insurance claims exists to resolve disputes between consumers and insurers in the wake of claims following accidents and other events. If you have recently been in a car accident and you feel like the claim settlement offered by your company was less than what you should have gotten, you might want to consider arbitration. Sometimes the insurer offers less than what the consumer feels like the totaled vehicle was worth, for example. These and other situations can lead to an arbitrator taking a look at all the facts and making a ruling on the case. It's a way to get an objective decision to resolve the conflict between you and your provider so that both sides can move on.

Neutral Party Arbitration Makes Sense

When you are right in the middle of a dispute with an auto insurance provider, you likely are emotionally wrapped up in the whole affair, so much that it is hard to really see the situation with clear, untainted eyes. This statement can be equally applied to the insurance adjuster or anyone else involved with the case on the provider's side. Neutral party arbitration just makes sense when these things come up. Many states with no fault auto insurance laws actually require binding arbitration for disputed claims. In all honesty, this is good news for both the insured and the insurer, because it provides for a relatively speedy resolution of the problem that both sides can live with. The last thing either party really wants is a long, dragged out legal process tying up both time and money.

Arbitration is similar to mediation in these disputed cases, but not exactly the same. Mediators can be thought of as advisors in claims disputes. They come before arbitrators. If they can come up with a resolution that both parties can agree on, the case is closed. But their advice is just a recommendation. There is no binding legal requirement for either party to follow it. On the other hand, arbitration in these cases is binding, meaning both parties are required to abide by the arbitrator's findings. There is no option of appeal, which makes this option appealing to those for whom time is a valuable asset. The arbitrator's ruling is final, one that both parties have to live with. So seeking arbitration is only something you would do if you really felt like you had a leg to stand on in your complaint against your insurer.

Advantages of Arbitration over Litigation

Arbitration has numerous advantages over filing a lawsuit in cases where you have a beef with the settlement being offered to you by your auto insurer in the wake of an accident. For one thing, to prepare for an arbitration hearing you do not have to hire an attorney, although you are free to do so if you wish. This can save you money over filing a lawsuit in civil court. Arbitration is also almost always a much faster process than civil litigation. Arbitration rulings over smaller claims usually can be resolved in less than six months. Sometimes just the preliminary proceedings of civil cases can take longer than that.

Not every dispute really calls for the kind of formalities of a court setup. You can keep your costs and the time piece under control by choosing arbitration over a lawsuit, especially for relatively small claims. In some cases these claims are resolved in a matter of weeks.

Potential Drawbacks to Claims Arbitration

With all this being acknowledged, arbitration certainly has its drawbacks as well. For one thing, the insurance company you'll be going up against will be much more experienced in these matters than you are, so you can't expect a slam dunk no matter how strong of a case you think you have. What's more, though this option typically costs less than a lawsuit, an arbitrator does cost money, usually charging by the hour. So you need to be prepared ahead of time and have a solid plan of action. Hiring an attorney can make sense if enough money is at stake in the proceedings. If arbitration does not make sense for one reason or another, there is always small claims court. This is another option you could choose without having to hire an attorney if you do not want one.

The arbitration process begins with the selection of the arbitrator, which itself can be quite a battle depending on the laws of your state and the guidelines set forth by your auto insurance policy. Hopefully, it will end with you getting what you asked for in the first place without costing you too much money out of pocket. Arbitration for car insurance claims is a viable option to consider in many different settlement claims dispute cases.


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