Many auto insurance policies contain what is known as an "appraisal clause," meaning any disputes that arise between insurance providers and policyholders are to be arbitrated instead of litigated in a courtroom. Each party is expected to hire their own appraiser to review the claim and any offer to settlement figures. If the appraisers are unable to agree on a settlement, they will submit their differences to a third appraiser. This appraiser is known as an "umpire." Any decision that two of the three appraisers are able to agree will be the awarded decision.
The Cost of Arbitration
Arbitration is not free. However, it is a much less formal and less costly process than a court procedure. Each side is responsible for paying their arbitrator. If a third arbitrator needs to be called in to help with the final decision, both parties will be responsible for his payment and will split the cost. Clearly, the goal for both sides is to settle the issue before it ever gets this far.
Arbitration Fees vs. Your Settlement
If it turns out that the appraiser fees cost more than the actual settlement then the arbitration process is not worth it. You should take time to think about requesting arbitration and carefully weight all of the pros and cons before making your final decision. You want to make sure that the process sense for you financially before you proceed.
Both you and your auto insurance company have the right to initiate the appraisal clause if you both cannot agree on a settlement. The arbitration process can take anywhere from a couple of weeks to a couple of months to be completed. In order to help close your settlement claim, consider the following:
- Consult with a car accident attorney to confirm that the settlement amount you are seeking is considered reasonable.
- Go through the chain of command. Speak to the adjuster's supervisor or manager. They are the ones that set the dollar range for the adjuster to negotiate your settlement. You may be able to convince them that it should be increased.
- File a complaint with your state's Department of Insurance.
- Hire an attorney to represent you and negotiate on your behalf
Be Prepared
Make sure that you have investigated the accident yourself. You should gather all necessary documentation that may be questioned. Medical bills, receipts, car repair estimates, and proof of days missed at your job are all important. The most important part of your settlement will deal with your injuries sustained in the accident. Be prepared with all of your medical records, reports and bills as you negotiate to show a need for the amount you are requesting. Your settlement should be enough to cover not only your current bills, but future doctor expenses as well. Have your doctor write an official statement about your injuries and any future treatment you may need.
You also want to make sure you have a specific amount for pain and suffering that you are willing to settle for. The rule of thumb when calculating pain and suffering is usually three times the total amount of your medical bills.
If your auto insurance company does not honor the arbitration decision, they are considered as acting in bad faith. You may need to contact an attorney experienced in these matters and take them to court. If you decide to pursue legal action, you may need to proceed quickly. You do not want to miss the statute of limitations on your case.
Choose Your Auto Insurance Company Carefully
Try to pick both your auto insurance company and agent carefully. A good and respectful relationship is one of the best ways to avoid and resolve disputes. Compare rates from 5 different companies before you decide to purchase.
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