Arbitration

What Does Arbitration Mean?

Arbitration is the process of using a neutral third party to resolve an insurance dispute between an insurer and a policyholder. It is often preferred by both parties because it can be more cost-effective and quicker than resolving the issue in court, where legal fees and time in front of a judge or jury are involved.

Insuranceopedia Explains Arbitration

Disputes often arise between an insurance company and a policyholder when the insurer offers a payout that is lower than the policyholder’s expectations. For example, if a policyholder files a claim after an auto accident, the insurer may propose a payout that the policyholder feels is insufficient. In such cases, arbitration can be used to have a neutral third party determine the fair value of the claim, helping to resolve the disagreement and settle the issue.