Arbitration
Definition
Arbitration is a form of alternative dispute resolution (ADR) where parties present their case to a neutral third party called an arbitrator instead of going to court. The arbitrator hears evidence and arguments from both sides, then makes a decision that may be either binding (final and enforceable) or non-binding (advisory only) depending on the agreement between the parties.
How It’s Used in Personal Injury Cases
Arbitration appears frequently in personal injury matters, particularly in uninsured and underinsured motorist claims where insurance policies often require arbitration instead of litigation. Many auto insurance policies contain mandatory arbitration clauses that require disputes about fault or the value of injuries to be resolved through arbitration rather than court. Arbitration can also be voluntary when both parties agree it offers a faster, less expensive path to resolution than a full trial.
Practical Example
Michael was hit by an uninsured driver and filed a claim under his own uninsured motorist coverage. His insurance company agreed he was injured but disputed the value of his claim, offering only $15,000 for injuries he valued at $50,000. Under the arbitration clause in his policy, Michael presented his evidence to an arbitrator who reviewed medical records, heard testimony, and issued a binding decision awarding him $35,000.
Why It Matters to Your Case
Arbitration typically moves faster than litigation and costs less in legal fees and expenses. However, binding arbitration decisions are difficult to appeal, so the outcome is generally final. Understanding whether your insurance policy requires arbitration—and whether it will be binding or non-binding—is essential when planning your strategy for recovering fair compensation.
Key Takeaway
Arbitration offers a streamlined alternative to court trials, but binding decisions are typically final—making preparation and strong evidence presentation critical to achieving a fair outcome.