What is the Arbitration Phase of a Car Accident Claim?

Car accident claims are typically handled through negotiations with insurance companies. Sometimes though, these claims cannot be settled. When no settlement agreement can be reached, filing a lawsuit is one option for resolving the claim. Arbitration is the other.

A personal injury attorney could let you know whether it might make more sense to pursue a trial or simply go into the arbitration phase. Additionally, an attorney could potentially serve as the arbitrator.

What Does Car Accident Arbitration Mean?

If you've been involved in a car accident, you may be left with medical bills, lost wages, and other such economic losses. Your accident might also cause you to endure certain non-economic losses and damages, such as pain and suffering.

Depending on the circumstances, you may be able to seek financial compensation for these losses. In an at-fault state, you can pursue the compensation for which you may be eligible by filing a claim with the insurance of the negligent party who caused the collision.

However, filing a claim doesn't guarantee an immediate payout. For various reasons, an insurance company may not offer the settlement you deserve.

You have several options when an insurance company won't pay you what you believe you're owed. One such option is filing a lawsuit in the hopes that a jury will award you damages in court.

A less well-known, but often beneficial, option is car accident arbitration. Because qualifications for arbitrators can vary from state to state, the specifics of the car accident arbitration process may vary depending on where you live and where your accident occurred.

In general, though, the car accident arbitration process involves one individual hearing all parties involved in the case present their arguments. This individual will then render a decision.

Car accident arbitration typically costs less money and takes less time than going to court. Allowing a single individual to decide whether a victim deserves compensation may also be preferable to leaving the decision up to a 12-person jury. The best way to learn more about this option is to discuss car accident arbitration with an attorney who has experience representing clients like yourself.

Why Not Just File a Lawsuit Instead?

Court trials are costly, time consuming, and are not always an option, especially if property damage was the only “injury” in a car accident. If you cannot reach a settlement agreement, and both parties in the claim agree to it, a car accident claim can move into the “arbitration phase” rather than proceeding to a trial.

What is the Arbitration Phase of a Car Accident Claim?

How Does Arbitration Work?

In the arbitration phase, both parties in the claim must agree on an “arbitrator.” The arbitrator can be a single individual, a group, or an organization. Arbitrators are nominated by all parties in a claim, and all parties must also agree on the assignment of the arbitrator.

The arbitrator is a third party that is not invested in the outcome of the claim. The arbitrator essentially acts like a judge and:

  • reviews evidence,
  • hears testimony or reviews formal, written statements,
  • and makes a ruling on the claim.

Once the arbitrator decides the claim’s outcome, all parties in the legal dispute must abide by the ruling. Neither is permitted to:

  • appeal the decision
  • or ignore the ruling.

This is why the agreement to arbitration must be a mutual or unanimous decision before a car accident claim can enter this phase.

How is an Arbitrator Chosen?

Arbitrators are chosen through negotiations. Each party in a claim typically nominates one candidate, and all must agree on the assignment before arbitration can begin.

All parties in a car accident negotiate to assign an arbitrator, but how are arbitrators nominated for the job? And how is the final decision made?

Accredited arbitrators are registered at the state level. Many insurance companies and lawyers select and nominate arbitrators from the list in the state in which a car accident occurs. There is, however, nothing that prevents nomination of an arbitrator that is not on the state registry.

All parties in a car accident claim review the qualifications and expertise of potential arbitrators before making a decision on their top choice. They may consider:

  • experience with car accident claims,
  • professional reputation,
  • service fees and availability,
  • and divested interest, or whether or not the arbitrator can be unbiased in the claim.

When Would You Need an Arbitration Hearing After a Car Accident?

The most common reason why someone could need a arbitration hearing after a car accident is if the insurance companies cannot come to a fair resolution that both parties are satisfied with. If you are not satisfied with the resolution from the insurance company, but you do not want to file a lawsuit against the other party, you are able to resolve the claim through arbitration.

If you do not believe that you were properly compensated for your injuries and/or the damages to your vehicle, you have the option to go through arbitration. It may be able to take less time than if you went to trial. Since trials can be long, going to arbitration could be a good option if you wish to handle this dispute in a more timely manner.

A personal injury lawyer will be able to advise you whether you are better off going through arbitration, rather than taking your claim to court.

How Long Does Arbitration Take?

While all cases are unique and can vary, arbitration usually takes less time than going to trial for your car accident would. The process can take several months, and it generally looks something like this:

  • 1-2 Weeks Request for Arbitration is filed and initiated
  • Weeks 2-6 An Arbitrator is selected for your case
  • Weeks 6-10 Information is exchanged and both sides prepare their case
  • Week 10-12 Arbitration hearing occurs and award is paid (if applicable)

The Arbitration Process and the Arbitrator’s Decision

Arbitration is usually faster and less costly than a court trial. The arbitrator sets the date for arbitration to begin and a deadline for all evidence to be submitted.

Arbitration meetings usually occur with all parties present in the same room, allowing the arbitrator to hear back and forth arguments in the claim. The arbitrator makes a decision on the claim and that ruling generally stands.

In limited circumstances, an appeal can be filed in court to challenge the decision of an arbitrator. In car accident claims though, most states limit the option of appealing an arbitrator’s decision to only cases in which “due process” procedures may have been violated.

In other words, if you are unhappy with the outcome of arbitration, you can only appeal if the arbitrator violated your right to “a fair hearing.”

Additional Resources On Arbitration

While it's a good idea to contact an attorney if your case is going to arbitration, you may have some questions about your case. You can find some frequently asked questions here: