People often think of just two options for solving a personal injury dispute with an insurance company: a settlement or a jury verdict. There are a few other ways the dispute may be settled, such as arbitration.
What is Arbitration?
Arbitration is a form of Alternative Dispute Resolution (ADR) and is used to resolve a dispute outside of the courtroom before an arbitrator. An arbitrator is an objective third party brought in to help create an agreement between both parties.
Voluntary vs Mandatory Arbitration
When arbitration is voluntary, both parties have agreed to resolve their dispute in this manner. Some people may choose to take a case to arbitration because it allows both parties to pick the arbitrator with expertise and knowledge in the case being disputed.
Mandatory arbitration generally occurs because of a clause in an insurance contract. Arbitration could also be mandatory if a judge orders a case to be resolved by an arbitrator.
Binding vs Non-Binding Arbitration
Before taking a dispute before an arbitrator, both parties must agree whether the decision is binding or non-binding.
Binding arbitration means the decision is final and cannot be appealed or disputed any further. Non-binding arbitration allows room for continued dispute and potentially going to court.
Pros and Cons of Arbitration
Just like taking a claim to court, arbitration has its own advantages and disadvantages. Some of the advantages to arbitrating a personal injury claim include:
- Privacy – Arbitrations are usually held behind closed doors and the terms of an agreement are confidential.
- Avoiding hostility – Both parties have an incentive to work together to reach an agreement, which may help prevent hostility.
- Faster than litigation – By avoiding the bureaucracy of local, state or federal courts, you may reach a resolution more quickly.
- Flexibility in scheduling – Court calendars are generally full, so it is more difficult to postpone a court proceeding. The flexibility of an arbitrator’s schedule may help ease the burden of meeting certain deadlines.
- Simplified procedure when presenting evidence – The rules of evidence and other procedural practices that are adhered to in the courtroom generally do not apply to the arbitration.
Some of the drawbacks of deciding a case through arbitration include:
- Limited ability to file an appeal – If arbitration is binding, you do not have the option to appeal the decision like you would with a court decision.
- You may be forced into it – Some arbitration clauses in insurance contracts do not leave much room for negotiations.
- Rising costs of hiring an arbitrator – Although some attorneys may consider arbitration because it could be cheaper than filing a lawsuit and going through all the court proceedings, the costs of hiring an arbitrator are increasing, bringing up the question of affordability.
- Questionable objectivity of the arbitrator – The process of choosing an arbitrator is not an objective one, especially when the arbitrators are being chosen based on a track record of decisions that favor insurance companies.
Why Would a Claim End Up in Arbitration Instead of Court?
Most car accident claims are settled by insurance companies outside of the courtroom. However, there may be times when a claim may need to be resolved by an objective third party and paying an arbitrator may be cheaper than having to take the claim to court.
Considering the time it would take to file a lawsuit, get a court date, have a judge assigned to the case and find a jury, your attorney and the attorneys for the insurance company may come to the agreement that arbitration would work better.
Consult with a Licensed Attorney
If you have additional questions about arbitration or filing an insurance claim, the car accident lawyers in Sacramento from our firm are prepared to answer them. We offer a free consultation with no obligation to take legal action.
Call us today at (916) 777-7777