Arbitration That Can Negatively Impact an Insurance Customer
Michael Babboni
Insurance Coverage
Before we can really get into how arbitration can negatively impact an insurance customer, it is of vital importance that we first understand what arbitration really is and what is involved.What is Arbitration?
Arbitration is just one of several methods that are used to find an alternative dispute resolution or an alternative to filing a lawsuit. It is a method used to try and settle outside of court to save on court costs and fees and the time that it takes to go to court.
Arbitration should not be confused with mediation, however, because the latter is more of an informal process that involves the use of a third party to help resolve disputes and the mediation process is not binding on either party.
When is Arbitration Typically Introduced?
When there is an insurance claim after a car accident that cannot be settled, then the arbitration process is often deployed by insurance companies when the two insurance carriers are disputing over the fault of the accident and the damages that are involved.
An arbitration clause is often introduced in a contract to avoid resolving any disputes using mediation or litigation. Instead, arbitration is used, and each party will then appoint an arbitrator.
How Can Arbitration Negatively Impact an Insurance Customer?
When it comes to arbitration and mediation, we should be aware of the differences between them and how choosing arbitration may ultimately negatively impact us as an insurance customer trying to seek compensation for a car accident claim or any other personal injury claim.
Arbitration, unlike mediation, is a formal proceeding and is typically binding. Meaning that we must accept what the arbitrator is saying and has decided. If the arbitrator does not decide in your favor, then there is also a very limited right to appeal the decision.
One of the biggest ways arbitration can negatively impact an insurance customer is if the customer signs a contract without actually reading the fine print. Anytime you are faced with signing a contract; it is important that you take the time to read it through thoroughly and gain a clear understanding of what it is you are signing. It is also recommended that you get your attorney to look over the contract as well to explain anything you are unsure of pertaining to the contract.
Recently, more and more Florida courts have been siding with the insurance customers regarding binding arbitration cases, but the reality is the situation could have been avoided if you read and understood the contract you were signing in the first place referring to binding arbitration rules.
Arbitration Pros and Cons
Arbitration comes with its own number of pros and cons, but each case is different. When it comes to the overall cost, speed, fairness, and finality of arbitration, you may see a more affordable way to settle disputes, as well as less paperwork, and a faster way to settle a dispute.
However, arbitration may not always decrease the costs involved and rather depends on the severity of the legal case and how complex it may be. Arbitration may not always work in your favor either, and you will have a limited right to appeal the decision that has been made.
Before making any kind of decision, it is important that you read and understand everything you are signing and always call on an experienced attorney to help you translate the legal terms and jargon in a contract before you pick up the pen and sign away some rights you will wish you had later.