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Insurance Mediation and How it Can Work For You

Sunday, November, 25, 2012


Insurance mediation is a form of Alternative Dispute Resolution (ADR) in which a neutral, third-party mediator, who is chosen by the parties in conflict, works with both parties to arrive at a mutually beneficial conclusion to the conflict.  The process of mediation encourages open communication and providing each party with the opportunity to be heard.

Insurance companies are constantly dealing with new regulations and restrictions placed upon them by the government and governing bodies, and disputes constantly arise concerning pay-out of claims.  These disputes can occur from practically any situation—from a car wreck to a flood or fire to a health-related claim.  

In fact, when a company or policyholder is unhappy with an insurance company’s decision regarding a claim, or the insurance company is accused of not holding up its end of the contractual bargain, often the insurance company requires some form of alternative dispute resolution (such as arbitration or mediation) to avoid taking the case to court.  Not only is alternative dispute resolution less costly and more effective than litigation, it also generally provides settlement agreements that work in favor of both parties.  More people are satisfied with the outcome of mediation than they are with the outcome of litigation, especially in matters related to insurance disputes. 

Insurance disputes that are normally handled through mediation include the following:

1. Claims that arise under a homeowners' insurance policy and involves loss due to a fire.

2. Claims that arises under a policy covering earthquake damage and involves loss due to an earthquake.

3. Claims that arise under automobile collision coverage or automobile physical damage coverage.

It is important to note, however, that there are some claims in which insurance mediation will not be applicable, such as claims involving the actions of an agent or insurance broker, or claims in which either party is alleged to have committed fraud.  In these cases, mandatory arbitration or litigation must be used to handle the dispute.