Arbitration has been showing up as a requirement more frequently in some property insurance policies. A past President of the National Association of Public Insurance Adjusters (NAPIA) recently asked me ‘what exactly is arbitration and how is it different than litigation or a trial?’ I figure that it may be a good time to have a Tuesday at 2 With Chip Merlin session to go over the various dispute resolutions involving trial, litigation, arbitration, appraisal, mediation and department of insurance sponsored mediation.

Arbitration is not appraisal. There is a huge difference. If a public adjuster, contractor or policyholder see the word “arbitration,” please note that you are in a different world than the “appraisal world.” The arbitration clause may read very similarly to that of an appraisal, but the two are governed under different laws.

In, Arbitration Is an Increasing Trend Found Within Property Insurance Policies, and Arbitration is Not Appraisal, I noted:

Arbitration is not appraisal. We have had policyholders and inexperienced lawyers from other law firms bring cases to us asking us to fix their bad arbitration awards because they treated the requirement of an arbitration like an appraisal.

Arbitrations require attorneys. It is almost like an informal trial. Evidence is presented after swearing in witnesses. It almost feels as if the proceeding is in a trial court. The proceedings are adversarial, and policyholders deserve to have excellent trial attorneys make the presentation because it is a lot more legally technical than an appraisal where the attorney’s trial skills do not matter.

The point of this post is to alert policyholders and public adjusters to determine whether the property insurance contract contains an arbitration provision versus an appraisal provision. We are finding more arbitration clauses within property insurance policies—especially commercial policies issued by surplus lines insurance companies. If the property insurance policy contains an arbitration clause, the proceeding differs vastly from appraisal and the case must be prepared as if it were going to trial rather than an informal appraisal.

So, tomorrow afternoon’s educational session starting at 2 PM EST will go into detail about the differences and the pros and cons of each of the dispute resolution methods. There are even differences in mediation which need to be more fully explored and explained. Some Department of Insurance sponsored mediation programs are nothing other than mediators warning non-represented policyholders of the pitfalls of filing suit without any explanation of policy benefits—they are state-sponsored sheep to slaughter programs aiding the insurance industry.

Here is a link for Tuesday at 2 With Chip Merlin.

Thought For The Day

Man must evolve for all human conflict a method which rejects revenge, aggression and retaliation. The foundation of such a method is love.
—Martin Luther King, Jr.