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You are here: Home / Blog / What is Arbitration and How Does it Work in a Car Accident Claim?

What is Arbitration and How Does it Work in a Car Accident Claim?

February 12, 2020 by Christopher

arbitration car accident agreement

A car accident is not only a traumatic event but can be a costly one too. You have to deal with medical expenses, lost wages, therapy, and so on. Negotiating a settlement with the insurance company will help you cover these costs and recover your health without going bankrupt.

However, what if the insurance company denies your claim or the amount they are offering is very low? The next step would be to take things to court, right? Well, before getting into a stressful trial, there is another solution your attorney may suggest: arbitration.

What Is Arbitration?

Arbitration is an ADR (alternative dispute resolution) where a neutral person decides the outcome of your dispute with the insurance company after hearing both sides and evaluating the situation. Judges or attorneys (retired or still active) are usually in charge of arbitration. Arbitration is legally binding for both parties, even though it’s less formal than a lawsuit dispute.

The difference between arbitration and mediation is that an arbitrator has the authority to decide the outcome of the dispute, whereas a mediator will only work with both parties so that they come to an agreement.

Generally, arbitration needs to be agreed upon by both parties, but in some cases, it’s a mandatory step before the case goes to court. For example, if the dispute is between you and your own insurance company, you can expect to have a clause in your policy that states this.

Who Chooses the Arbitrator?

Either party can nominate an arbitrator, but both parties must agree on having that person or group arbitrate the dispute before the process begins. You can choose an arbitrator by contacting arbitration groups. The insurance company can also suggest a list of arbitrators you can choose from.

Arbitration Details You Should Know about

  • “High-low” agreement: an interval set before the arbitration that establishes a low and a high limit of the settlement you could get in the end.
  • There are two types of arbitration: binding and non-binding. The latter allows you to still file a lawsuit if you don’t agree with the arbitrator’s decision.
  • Bring the same evidence you would have in court. Even if it’s not a lawsuit, arbitration follows the same process of backing up claims with evidence, so make sure you build a strong case file containing all the necessary evidence
  • A St. Louis auto accident lawyer to represent you through the arbitration process is not mandatory, but we strongly recommend speaking with one, as this is a dispute, after all.
  • Carefully check your policy contract before filing a lawsuit against your own insurance company. A binding arbitration clause may be in place, which requires you to take this step before filing a suit.

In conclusion, arbitration is meant to solve a dispute before the case goes to court. It is different from mediation and, although not as formal as a lawsuit, it has the legal power and should be taken as seriously as a court case.

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Filed Under: Blog Tagged With: Car Accident Claims

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    Copyright © 2021 The Hoffmann Law Firm L.L.C.
    The images included on this site are not actual attorneys, events, or clients. The choice of a lawyer is an important decision and should not be based solely on advertisements. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.Attorney Chris Hoffmann handles car and truck accident claims throughout Eastern Missouri and Western Illinois. He represents injured clients in St. Louis, St. Charles, St. Peters, Clayton, East St. Louis, Alton, Hillsboro and Belleville, and other cities in St. Louis County, St. Charles County, and Jefferson Country, MO, and St. Clair County and Madison County, IL.