Auto Insurance Arbitration: Understanding The Process

Auto insurance arbitration is a method of resolving legal disputes without going to court. It is a form of Alternative Dispute Resolution (ADR) and is often chosen as it is faster, cheaper, and less formal than a courtroom trial. In auto insurance arbitration, a neutral third-party, called an arbitrator, is chosen to hear both sides of a disagreement and make a decision about the case. This decision is typically legally binding and cannot be appealed.

Binding vs. Non-binding Arbitration

Arbitration is a form of alternative dispute resolution (ADR) that is encouraged by the courts. It is a flexible, practical, and cost-effective alternative to formal litigation. In the context of auto insurance, arbitration occurs when an arbitrator, or a neutral third party, steps in to settle a case and make a decision about how it's going to be resolved.

Binding Arbitration

In binding arbitration, disputing parties waive their right to a trial and agree to be bound by the arbitrator's final decision. The arbitrator's decision is typically legally binding and cannot be appealed. Binding arbitration is suitable for disputes where a quick resolution is required, or where the continuation of work is invaluable to both parties. Most mandatory arbitration clauses, including those in auto insurance policies, require binding arbitration.

Non-binding Arbitration

Non-binding arbitration is a more casual process used to minimize court costs and delays and is often used for petty disputes. The arbitrator still makes a decision, but this decision is not binding, and no enforceable award is issued. Each disputing party can reject the decision and request a formal trial. Non-binding arbitration is useful for creating guidelines for parties to follow, helping them avoid conflict in their future dealings, and preserving a healthy working relationship.

Choosing an Arbitrator

• Understanding the role of the arbitrator: The arbitrator is a neutral third party who hears both sides of the dispute and makes a binding decision. They review evidence, listen to witnesses, and make a determination regarding the case. It is important to select someone who understands their role and has experience in arbitration.
• Experience and expertise: Look for an arbitrator with relevant experience and expertise in car accident claims and insurance-related matters. They should have a strong understanding of the legal and technical aspects of such cases. Arbitrators are often retired judges or experienced attorneys.
• Impartiality and reputation: It is essential to select an impartial arbitrator who can objectively review the evidence and hear both sides without bias. Research the reputation of potential arbitrators for fairness and integrity. Check their track record and seek references or feedback from past clients to ensure they are unbiased and will not favour insurance companies.
• Agreement between parties: Both insurance companies must agree on the chosen arbitrator. Each company may suggest potential candidates, and it is important to find someone acceptable to both parties. This process can take time, so be prepared for negotiations.
• Arbitration groups or associations: Many arbitration agreements require disputes to be handled through arbitration groups such as the American Arbitration Association (AAA) or Judicial Arbitrations and Mediation Services (JAMS). These organisations provide lists of potential arbitrators, and each side can select preferred candidates. The association then looks for names accepted by both sides.
• Independent arbitrators: If you prefer, you can also find an independent arbitrator. Many county and state bar associations have arbitration programs that can connect you with qualified, independent arbitrators.
• Research and due diligence: Before making a decision, conduct thorough research on potential arbitrators. Review their websites, past cases, and any available information about their experience and success rate. Ensure they have expertise in car accident claims and are not biased toward insurance companies.
• Binding or non-binding arbitration: Determine whether the arbitration will be binding or non-binding. In binding arbitration, the arbitrator's decision is final and cannot be appealed. In non-binding arbitration, both parties have the right to accept or reject the decision and may proceed to court if they are unsatisfied.
• Cost considerations: Arbitration hearings can be costly, so it is essential to discuss and agree on cost-sharing arrangements in advance. Administrative fees, arbitrator expenses, and other costs should be clearly outlined and understood by all parties.

Remember, selecting an arbitrator is a critical step in the auto insurance arbitration process. Take the time to research, negotiate, and choose an impartial and qualified individual who has the necessary experience and expertise in car accident claims.

Preparing for Arbitration

Once you've filed for arbitration, your first task is to select an arbitrator to hear your claim. Arbitrators are often retired judges or experienced lawyers. The parties generally have to agree on an arbitrator, so research each candidate and choose one with a reputation for fairness and integrity.

After you agree on an arbitrator, set a deadline for exchanging documents with the insurance company and a date for the arbitration hearing.

Review the information provided by the insurance company. You need to understand the argument they are making against your claim. Be prepared to present evidence that weakens their case.

On the day of the arbitration, be prepared to:

• Make an opening statement
• Call witnesses and cross-examine them
• Present evidence that explains and supports your claim
• Be prepared to handle opposition
• Make closing statements

Remember that arbitration is like a courtroom trial without all the detailed rules of procedure. It's normal to feel some stress and anxiety about the proceeding. Accident victims can boost their confidence by being well-prepared.

• Organize your documents. You'll typically need to submit documents in advance of the hearing. For example, you'll want to submit medical records as proof of your injuries and pay stubs to support your claim for lost wages. Make sure you send copies to the arbitrator and the other side. Make copies for yourself too and bring your copies to the hearing.
• Use photos, drawings, and diagrams as exhibits to make your points. You may have taken your own car accident scene photos or you might find some helpful photos and diagrams in the police report.
• Organize your testimony. You will have a chance to tell your side of the story. Think carefully about what you want to say. You might even want to put your thoughts in writing before the hearing to make sure you remember everything you want to tell the arbitrator.
• Anticipate the other side's arguments. Think about what the insurance company might argue and prepare to rebut it. Do you expect the insurance company to argue that you share fault for the accident? Will the insurer try to deny you compensation because you didn't get the "right" medical treatment? Use what you learned during negotiations to push back against their defenses.
• Prepare for witnesses. If you plan to call witnesses, think about what you want to ask them. Write down your questions so you don't forget anything important. You'll want to prepare to question the other side's witnesses too. Be respectful of all witnesses.

Arbitration Hearing

An arbitration hearing is less formal than a court hearing but follows a similar structure. It is a legal proceeding where both parties present information about their claim to a neutral third-party, the arbitrator. The arbitrator acts as both judge and jury and is responsible for deciding the outcome of the case. The hearing typically takes place in the arbitrator's office but can also be held in conference rooms at courthouses, meeting rooms at hotels, or other neutral locations.

The hearing usually lasts a few hours, but some cases can last for days. The hearing proceeds as follows:

• Opening Statements: Each party introduces themselves, provides a brief description of their claim, and outlines what they want from the arbitration.
• Case Presentations: Each party presents their case to the arbitrator, including any evidence and witnesses. If the dispute is with another driver's insurance company, the claimant must prove that the other driver was at fault and therefore liable for their injuries. The insurance company may call the other driver to testify that the accident was the claimant's fault.
• Closing Statements: Each party summarises the strong points of their case and explains why the arbitrator should decide in their favour.

After the hearing, the arbitrator will review the information provided and make a decision. This review process can take hours or days, depending on the complexity of the case. The arbitrator's decision, also known as the "award", is typically sent to both parties in writing within 14 to 30 days of the hearing. The award is legally binding and cannot be appealed, unless the arbitration is non-binding.

The Arbitration Award

The award will be mailed to both parties, usually within 14 to 30 days after the hearing. The statement will outline the compensation amount, which should account for all damages incurred due to the car accident. This includes compensation for emotional distress, pain and suffering, disfiguring injuries, wrongful death damages (where applicable), and damages sustained to personal property, including the claimant's vehicle.

Future anticipated medical expenses associated with the accident-related injuries may also be included in the award. The arbitrator's decision is typically binding and could be the final resolution of the case. However, if you disagree with the decision, you still have the right to file a personal injury lawsuit.

Frequently asked questions