Understanding the Benefits of Arbitration...

There are benefits of arbitration that are pretty strong when compared to other options for being awarded damages. After failing to negotiate with your own insurance company, you'll have to decide if you want to pursue the matter in a more formal setting.

Arbitration can be one of the best ways to go when it’s applicable and the benefits can often outweigh going to court.

The first benefit of arbitration is the money. You can be awarded any sum of money in this process, since there's no state limits. If the small claims court limits are too low, and the costs of a formal court case are too high, arbitration might be best for you. Filing for arbitration is also relatively inexpensive. The fees aren’t much higher than small claims court and are much less than a formal trial.

In arbitration proceedings the arbitrator will do their best to guide you through each step. They aren’t in the position of having to rush through a few dozen cases in a day. Also, since they’re hired on an hourly rate, they won’t mind if the arguments are long-winded. Because of this you may find times when you're involved in a structured, yet somewhat open, discussion with the defendant.

While some forms of arbitration do run the risk of leaving you with nothing, there are ways to arbitrate so you receive a guaranteed payment. In those cases the benefits of arbitration are clear.

What happens is that both sides present an offer before the hearing. The arbitrator is then asked to decide on one offer or the other. They aren’t allowed, for any reason, to award you anything different than one of those prearranged sums.

This is usually referred to as 'high/low' arbitration. Because the arbitrator can’t stray from either figure, both sides will always be making their best offer.

Imagine if the insurer didn’t offer their highest possible settlement. If their offer is clearly far lower than the necessary damages, the arbitrator will have no choice but to choose your amount. But the same goes for you. If you choose a figure that's thousands of dollars above what's realistic, then the arbitrator won’t be able to justify it. They can’t split the difference, and will have to go with the insurer's amount.

So again, the benefit of high/low arbitration is that both sides present their best offer, guaranteeing you'll walk away with something. If it’s a choice between settling or going to a high/low arbitration hearing, you can’t possibly lose by choosing the latter.

Still have questions about the benefits of arbitration? Click Here.


Find out if you're entitled to a

Custom Search

The accuracy of information on this site is not guaranteed. In some cases information on this site is the opinion of the writer. Nothing on this site should be considered formal legal advice. Click below to read our full User Agreement, Disclaimer and Copyright Information.