Mapping The Insurance Maze

What in the name of all that’s complex verbiage are Alternative Dispute Resolutions Mike????

Welcome back folks. Today, I’m going to let you in on some options you may have, if your claim settlement isn’t going how you feel it should go. Before jumping to sue your carrier, you have other options. Those options could save you money, time, effort, energy, and keep things somewhat more amicable.

Alternative Dispute Resolutions, or ADRs, are:

• Arbitration
• Appraisal
• Mediation
• Settlement Conferences

I’m sure there may be others, but available ADRs are written in the policy, and per state and company guidelines. Unfortunately, not all ADRs may be available to everyone.

Let’s start with Arbitration.

Arbitration is kind of like a trial. Instead of a judge, the presiding person who will hear both sides of the argument/issue is called an Arbiter. He or She will serve as a neutral party, and their goal is to hear the facts of the loss, and make an impartial decision. As a policy owner, during Arbitration, you can represent yourself, or have an attorney represent you. Typically with Arbitration, if it is agreed, the decision made by the Arbiter is final. This is called binding arbitration. If at the beginning of the case, both parties think they want to take it to court, they can elect what’s called non-binding arbitration. Arbitration is usually less expensive, and may be less formal than going before a judge.

Appraisal

The Appraisal ADR deals is triggered when the policy owner is not satisfied with the final estimated cost of repairs allowed by the carrier.

Example
Tropical Storm Evan comes through Charlotte, NC and rips Isla’s roof off her home. Her insurance company – Always There Mutual estimated that repairs are $11,000. Isla’s contractor states that it will cost $25,000 to fix her roof. The company is standing firm on this decision given the age, size, and condition of the existing roof system and what needs to be done. Isla can invoke the Appraisal ADR to help close the cost gap, after all other measures have been exhausted vs. suing her carrier.

To process appraisal, both parties, in this case Isla and Always There Mutual, will both pay for their own Appraisers. Both Appraisers will make their assessment of what they feel the value of the property is, and present it to the other. In addition, they will hire a 3rd Appraiser, called an Umpire, who will act as the decision maker.

Mediation

Mediation is the third option up. With Mediation, it is similar to Arbitration, but it is non-binding. A Mediator serves as the neutral third party. Mediation is a great way to talk help resolve coverage concerns. Financially, it is less expensive that filing Suit and Arbitration. It is also typically quicker.

Settlement Conferences

Settlement Conference(s) is the last option discussed. A Settlement Conference involves both parties coming before a judge, in an informal setting. The goal is to work the dispute out, before it goes toward a formal trial. The judge typically does not force a settlement, but is there to encourage the matter to be resolved.

Please Note, as mentioned earlier, Not All options are available to everyone. There are other processes that are state specific, that I have not mentioned. In a future article, I will try to address major state differences.

So before you jump ahead to file a suit, know that you have other options.

~ Til Next Time!