Alternative Dispute Resolution

Reviewed by Sujaini | Updated on Aug 01, 2021


What is Alternative Dispute Resolution?

Alternative dispute resolution, in terms of insurance, is one of the several processes that insurance companies use to resolve claims and contract disputes. This is the course of action offered as a form of recourse to insured clients who are denied an application. This is used to prevent lawsuits and arbitration, which is expensive and time-consuming.

Alternate solutions to conflicts can take several forms. Examples of such a settlement are non-binding arbitration and quick, direct negotiations between the insured and the carrier. In certain situations, where needed, a neutral third party can be brought in to serve as a mediator.

Mandatory Clauses

Many insurance policies have mandatory Alternative Dispute Resolution clauses. This can save consumers time and money, but not always, especially when there is a substantial and complex claim under dispute, and there are widely differing views about how the facts are interpreted.

It is best to resolve all the claims within the insurance corporation first than to appoint a public adjuster to represent you before seeking the settlement of disputes. Public adjusters can make their case determination with a report which you may send to the insurance provider afterwards.

An advantage of using public adjusters, however, is that they are paid a fee from the payout, comparable to insurance lawyers. In other words, only if you do, they get paid, which helps them to work in your best interest. Public adjusters are hired to evaluate the work done by the independent adjuster to ensure that no corners have been cut and the homeowner receives as much as possible.

Mandatory arbitration is just as successful as the mediator that is handling the argument. Several mediators come from the insurance industry, so a built-in tilt towards the point of view of the insurers may exist. They can interpret clauses in the policy by industry norms and standards, which may be very different from what a policyholder or typical customer would read into a boilerplate clause.

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