What Is Insurance Arbitration?
<lingo>In most car accidents, the person at fault is responsible for paying for the losses of the other. In some cases, that blame can be divided. In other cases, there is a dispute about how much money the claim should be. When there are situations and disputes like this, it becomes necessary for a third party to make decisions in the matter. This is called insurance arbitration. It is a process in which the insured or a vendor along with the insurance company settle the claim based on the decision that the third party makes. </lingo>
Insurance Arbitration Briefly and Clearly Explained
When a car accident occurs, one or both parties may wish to file a claim to cover their losses with an insurance company. When two parties cannot agree on a decision about that claim, a third party – one that is not partial to either person – is called on to make the decision. This person is called an arbitrator. He or she hears the case and all details from both sides of the claim. Then, the arbitrator makes a decision that both parties agree to. The process works much like a court case, but it is handled outside of the court system.
<twitter>The insurance arbitration process works much like a court case, but it is handled outside of the court system</twitter>
Most often, the insurance arbitrator will answer a number of questions about the incident. This could include whether or not the party can collect any money for damages from the other party. And, if so, the arbitrator should determine how much to the person can collect.
It’s important to note that arbitration is different from mediation. In a car accident claim mediation, the mediator works to get both parties to come to an agreement through negotiation. However, unlike a mediator, an arbitrator has the ability to make the decisions. The decisions made by the arbitrator are agreed to by all parties included.
In order for insurance arbitration to occur, both parties must agree to the process. There is no way to force an insurer or other party into the process. This can make this process a bit more difficult to obtain than other forms of mediation.