When a policyholder and their insurance provider cannot agree upon the results of a commercial insurance claim, frustrations can quickly arise. While going through the process of litigation can be an option in some cases, arbitration is often utilized to resolve claim disputes. Understanding what happens when an insurance claim goes to arbitration can help business owners to know what to expect throughout the process.
The Insurance Claim Arbitration Process
The results of an insurance claim can be disputed for a variety of reasons. In most instances, claim disputes occur due to the awarded amount being much lower than what it should be or a valid claim being denied. These situations can put a heavy strain on commercial property owners, as their business expenses will only continue to rise the longer the property is inoperable or requires repairs.
To resolve these disputes, arbitration is a favored medium among insurance companies. While litigation can be utilized in certain situations, it may take longer to reach a resolution and is often more expensive. However, some commercial policies require mandatory arbitration, meaning that if a dispute arises, arbitration is the only means for resolving it. Because of the complexities involved with arbitrating commercial property damage claims, it’s important to know what happens when an insurance claim goes to arbitration. In most cases, the process of arbitration includes:
Notifying the Insurance Company and Reviewing Policy Terms
One of the first things commercial policyholders should do after disagreeing with the assessment of their claim is to notify the carrier of the issue. Once the insurer is made aware of the disagreement, both parties will need to agree to pursue arbitration for the process to begin (unless arbitration for disputes is already mandated in the terms of the policy).
As some policies require mandatory arbitration, policyholders should take the time to review the policy’s terms to determine if arbitration is indeed mandatory. In the event a policy does require mandatory arbitration, litigation cannot be pursued and both parties must utilize arbitration as the means to resolve their issues.
Once both parties have agreed to arbitration, the policyholder should collect all documents, photos, videos, and statements regarding the disputed claim. These will be used in the arbitrator’s investigation, so the policyholder must provide as much information on the damage, and the event that caused it, as possible. The insured should also explain why they are not satisfied with the insurer’s findings so the arbitrator is aware of the issues.
Selecting an Arbitrator
When selecting an arbitrator for an insurance dispute, the individual must be an unbiased, independent party or panel that is unaffiliated with either side. The policyholder and the insurer can also choose to designate an organization like the American Arbitration Association to help provide arbitration services. Often, if the parties cannot agree on an arbitrator, each party will select an arbitrator, and the arbitrators selected by both parties will choose a third arbitrator to act as an umpire.
The arbitrator will review the facts of the case as presented by both sides and come to an appropriate decision on the result of the claim. Both the insurer and the insured have the option to represent themselves or to hire legal counsel to represent them throughout this process.
Reviewing the Arbitrator’s Findings
Once the arbitrator has reviewed the evidence surrounding the claim as presented by both sides, they will make a decision or arbitration award. The award includes all the information on the case, along with the arbitrator’s final decision on fees, damages, and/or any disciplinary actions, if needed. It’s important to note that the arbitrator’s award can be either binding or non-binding.
In binding arbitration, both parties agree that the award cannot be appealed, regardless of the circumstances. Once the award is handed down in binding arbitration, it stands as-is. In non-binding arbitration, however, either party can appeal the award in court in the event they are dissatisfied with the outcome.
Insurance Arbitration Attorneys
When handled properly, arbitration can be a fast and efficient way to resolve complex insurance disputes, but the outcome can often turn on the quality and experience of a policyholder’s legal team. At Raizner Slania, our team of experienced insurance coverage attorneys is well versed in the arbitration process and has successfully represented countless commercial policyholders who have been taken advantage of by their insurers. If you need assistance with a commercial claim that is set to be arbitrated, we can help. Contact our office today for more information.