What to Do When You Reach an Impasse with Your Insurance Adjuster

Most insurance policies contain a provision that calls for arbitration should the policyholder and insurance company disagree on a settlement figure. Arbitration replaces litigation, and settles disputes through a neutral third party who reviews the case and makes a decision on how much money the insurance claim is worth.  If your policy requires that you and your insurance company settle disputes through arbitration, then both you and your insurer must comply with the decision of the arbitrator. Arbitration is typically only used in situations where damages are the only issue.

How Arbitration Works and What It Costs

Arbitration provisions in insurance policies are often called “appraisal clauses.” Each party (the policyholder and the insurance company) hires an appraiser to look at the claim and recommend a settlement figure. If the appraisers can’t agree on a settlement figure, a third, neutral appraiser is brought in to look at the claim. A decision by any two of the three appraisers is typically binding on the parties. Either party may invoke the appraisal clause when a settlement can’t be reached. The process itself can take anywhere from a couple of weeks to a couple of months.

While the arbitration process is considerably less costly than litigation, it is still not free. Each party must pay for its own appraiser and share the cost of the third appraiser. If these costs are more than what you’re hoping to get in a settlement, then rethink your strategy. It should not cost you more to go through arbitration than you would otherwise gain after settlement has been reached in your favor. Another form of dispute resolution is mediation and is often confused with arbitration. Mediation is a process where a trained mediator, best thought of as a facilitator, meets with the parties to the dispute, both individually and collectively, to try to help the parties reach an agreement to resolve the dispute. However, mediation is generally not binding.

An insurance company is acting in bad faith if it does not honor a binding arbitration decision and can be sued in a court of law. If you are in this situation, consult an attorney right away.

Other Roads to Take if All Else Fails

If negotiations hit the proverbial “brick wall,” and you are not able to, or requried to, arbitrate the case, you might consider one of the following:

(1) Small Claims Court: This option may make sense if your damages involve a relatively small amount. Small Claims Courts are a faster, inexpensive and less stressful way to resolve disputes. And generally you can sue without using the services of a lawyer (though using a lawyer to coach you as to strategies makes sense). All Small Claims Courts, however, have a maximum amount for which you can sue, and this amount differs from state to state. So if you are looking for $8,000 and your state’s dollar limit is $5,000, it may not make sense to proceed. You will be giving up your right to seek the extra $3,000 in another court.

(2) Department of Insurance: You can make a complaint to your state’s department of insurance, although the agency is unlikely to intercede favorably on your behalf. However, the mere suggestion that you are filing a complaint may spur a recalcitrant insurance adjuster to increase the settlement figure. Your state agency may investigate your claim if the insurer wrongfully denied coverage, acted improperly or refused to negotiate a settlement.

(3) File a lawsuit: You can sue the person responsible for the accident if: 1) you’re not getting anywhere with the insurance adjuster, 2) the claim is more than the maximum limit in your state’s small claims court, 3) there are insurance coverage issues, or 4) your statute of limitations is set to expire within 2 or 3 months. Where the stakes are high (i.e., serious or permanent injury), you are better off with legal representation.

For more information about auto accidents and the law, visit Free Car Accident Legal Advice.

Case Studies: Resolving Insurance Disputes and Exploring Alternatives

Case Study 1: Successfully Resolving an Insurance Dispute Through Arbitration

Lisa, a homeowner, experienced significant property damage due to a severe storm. However, her insurance company disputed the extent of the damage and the appropriate settlement amount. With the policy containing an arbitration provision, both parties appointed appraisers to assess the claim. After thorough evaluation, the appraisers couldn’t agree on a settlement figure.

As a result, a neutral third appraiser was brought in to review the case. The final decision, reached by two out of the three appraisers, became binding on Lisa and her insurance company. Through the arbitration process, the dispute was successfully resolved, ensuring fair compensation for the damages.

Case Study 2: Exploring Small Claims Court as a Viable Resolution Option

Michael, a policyholder who found himself in a deadlock with his auto insurance company. Following a car accident, Michael’s insurer refused to cover the full extent of his medical expenses, claiming they exceeded the policy’s limits. Frustrated with the insurance adjuster’s stance, Michael decided to pursue legal action in Small Claims Court.

Despite the absence of legal representation, he prepared his case thoroughly and presented compelling evidence to support his claim. Ultimately, the court ruled in Michael’s favor, recognizing the insurance company’s obligation to cover the medical expenses up to the policy limits.

Case Study 3: Resolving an Insurance Dispute With Assistance From the Department of Insurance

Sarah, a business owner who faced difficulties with her property insurance claim. Despite providing thorough documentation and evidence, Sarah’s insurance adjuster continually delayed the claims process and undervalued the damages.

Frustrated with the lack of progress, Sarah decided to file a complaint with her state’s Department of Insurance. The involvement of the department prompted the insurance company to reassess the claim more diligently. As a result, Sarah received a fair settlement offer, ensuring her business’s recovery from the loss.

Case Study 4: Seeking Resolution Through Lawsuit in Complex Insurance Coverage Case

David, who experienced a severe accident resulting in significant injuries. However, his insurance company disputed coverage, claiming certain aspects of the accident fell under policy exclusions. Faced with mounting medical expenses and ongoing rehabilitation needs, David decided to file a lawsuit against the responsible party and his insurance company.

With the assistance of an experienced personal injury attorney, David navigated the complex legal process. The lawsuit not only held the responsible party accountable but also compelled the insurance company to honor the coverage and provide the necessary financial support for David’s recovery.