Arbitration — Insurance Claims Definition
General
A binding or non-binding process where an arbitrator or panel decides a dispute outside of court, per contract or agreement.
Insurance policies and UM/UIM endorsements often require arbitration for certain disputes. Binding arbitration produces a final award with limited judicial review. Rules and arbitrator selection follow the policy or forum rules.
Arbitration can be faster and cheaper than trial but may limit discovery and appeal rights.
Examples
Underinsured motorist coverage disputes go to binding arbitration with a three-arbitrator panel per state statute.
Common Mistakes
Confusing appraisal with arbitration — different scope and procedures. Signing arbitration agreements without reading appeal limitations is risky.
