What You Don’t Know about Arbitration Clauses Could Hurt You in an Insurance Dispute

By Clint Scott | March 18, 2016

What You Don’t Know about Arbitration Clauses Could Hurt You in an Insurance DisputeBecause we handle a tremendous amount of insurance disputes each year, our team has a firm grasp on arbitration. (You can see a couple of examples right on my attorney bio page.) The average policyholder doesn’t know much about arbitration, though, and that can hurt you in the event that you ever need to make a claim.

Arbitration is a form of Alternative Dispute Resolution (ADR). It’s supposed to help you and the other party avoid litigation, and the time and costs associated with going to trial. In essence, it works like this: two parties (the policyholder and the insurance company) cannot reach an agreement on a fair settlement of a claim. Rather than go to trial, both parties agree to arbitration, where an arbitrator will act in the place of a judge and review the evidence and make a decision. When you choose arbitration, you still:

  • Use an insurance dispute attorney to argue your case
  • Present evidence
  • Present testimony, when applicable
  • Abide by the decision of the arbiter

That last point is especially important: an arbiter’s decision is legally binding. Whatever the arbitrator decides, both the policyholder and the insurer must live with it – usually.

Appealing an arbitral award

In Tennessee, there are a small handful of grounds on which an appeal can be brought. This is different than appealing a decision in a civil or criminal court, where a judge will look at the facts of the case. In order to overturn an arbitration award, an insured typically has to prove that the arbitrator was partial to the other party, biased against the insured, or committed an act of fraud.

Arbitrate or litigate?

Depending on the nature of your policy, you may be forced into, but if you have a choice, you should come in and speak to one of our insurance dispute attorneys at McWherter Scott & Bobbitt. We have offices in Nashville, Chattanooga, Memphis and Jackson, so travel is not an issue for us should you choose to go that route. We can advise you about your options and help you make a decision that is best for you. To schedule a meeting with Tennessee insurance dispute lawyer Clint Scott or Brandon McWherter, please contact McWherter Scott & Bobbitt. We can help.

Posted in Insurance Disputes