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What You Should Know About Settling a Car Accident Claim Through Arbitration

Posted on behalf of Peter T. Nicholl in Car Accidents Jan 25, 2022

check box for negotiatingMost car accident claims are resolved with a settlement between the victim and the at-fault driver’s car insurance company. While many settlements are reached after negotiation between the victim’s attorney and the insurance company, some settlements are agreed to after alternative dispute resolution.

One of the most common forms of alternative dispute resolution is arbitration. There are advantages and disadvantages to arbitration, both for victims and the insurance companies.

Below, the experienced attorneys from The Law Offices of Peter T. Nicholl discuss some of the things you should know about arbitration, including Maryland law. If the insurance company suggests arbitration, you should discuss it with a licensed attorney. Arbitration can benefit you, but without experienced legal help, the insurance company could try to underpay your claim.

Maryland Prohibits Binding Arbitration Clauses in Car Insurance

Some states allow car insurance companies to put binding arbitration clauses in their policies. That means crash victims who file first-party claims with their insurance companies would be forced to enter arbitration if they do not accept the insurer’s settlement offer.

This would probably only come up if the crash was caused by an uninsured driver or one who did not have enough liability insurance to cover the victim’s damages. However, being forced into arbitration benefits the insurance company, as it may eliminate the possibility of the victim filing a lawsuit.

Fortunately, Maryland prohibits car insurance companies from writing binding arbitration clauses into their insurance contracts. That means the decision about arbitration is up to the victim.

The Arbitration Process

Arbitration is like a courtroom trial in some ways. Both sides present information to an arbitrator. If you agree to binding arbitration, the decision made by the arbitrator is final and cannot be appealed. However, if you agree to non-binding arbitration, you can still appeal the decision by filing a lawsuit.

That said, insurance companies may not agree to arbitration unless the decision made by the arbitrator is legally binding. That is why it is important to discuss the situation with an experienced Maryland auto accident attorney before agreeing to arbitration. You need someone fighting for your best interests against the insurance company, which is looking to pay out as little as possible.

Choosing an Arbitrator

One of the most important parts of the arbitration process is the selection of the arbitrator. These people are often retired judges or experienced attorneys. You can bet the insurance company is going to recommend people who they believe will make a decision that favors their interests.

You should hire an attorney to represent you, so he or she can help with the selection of an arbitrator who is more likely to be fair and is not financially tied to the insurance company.

Once an arbitrator is selected, a deadline will be set for exchanging documents and another deadline will be set for the hearing itself.

What Happens at the Hearing?

An arbitration hearing usually lasts a few hours and is like a trial. However, it does not take place in a courtroom. These hearings often happen in a law office.

Arbitration is also much less formal than a courtroom proceeding. However, it has some of the same parts, including:

  • Opening statements
  • Calling of witnesses
  • Cross-examination of witnesses
  • Presentation of evidence
  • Closing remarks

Pros and Cons of Resolving a Claim Through Arbitration

Two of the biggest advantages of arbitration is it saves time and money. It can take months to get to trial and a trial often takes longer than arbitration. In other words, you can get compensation faster through arbitration than a courtroom trial.

Another advantage of arbitration is the insurance company usually sets a floor for compensation. In other words, no matter what the arbitrator says, you should get at least that minimum amount of compensation. The insurance company may also set a limit to compensation – usually the limit of the insurance policy. However, this is set in exchange for the floor for compensation. These are known as high-low agreements.

When you go into arbitration with a high-low agreement, you may be more likely to get a favorable result.

However, arbitration is not a courtroom trial. You could end up getting significantly more compensation from a jury than the insurance company. Another disadvantage is the arbitrator could have financial ties to the insurance company. That is why you need an experienced attorney helping to protect your interests before agreeing to arbitration.

Arbitration can also be a bad idea if you have an attorney who lacks relevant experience. You need to be confident your attorney will present a strong case to the arbitrator.  

Have Legal Questions After a Car Crash? Call to Schedule a Free Consultation

The attorneys at The Law Offices of Peter T. Nicholl have secured millions on behalf of motor vehicle crash victims. Our goal is to recover full compensation to help victims move forward.

We manage the entire legal process on behalf of our clients, at no upfront cost. That means no risk to you.

Check out our testimonials page to learn what our clients have to say about the services provided by our firm. 

Contact our personal injury lawyers for a free consultation if you have been injured by another’s negligence. You may be entitled to compensation.

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