How Long Does Insurance Arbitration Take?

Depending on the extent of damage present, commercial property damage claims can cost business owners money, resources, and time to make whole. If the policyholder and the insurer cannot agree on coverage or the value of a claim, it can lead to even further disruptions. When this occurs, arbitration is becoming the favored method among insurance companies to resolve disputes. Knowing just how long the insurance arbitration process can take can help business owners know what to expect.

Commercial Property Insurance Arbitration Timeline 

Arbitration has become a favored method for insurers to resolve claims disputes. The process offers an alternative to litigation when the policyholder and insurer cannot agree. 

Arbitration is a form of alternative dispute resolution (ADR). When utilized, an independent, unbiased individual, known as an arbitrator, will investigate the claim and make a final decision on the claim. Once the arbitrator comes to a decision, an award is issued. The award can be legally binding on not only the dollar amount awarded for covered losses, but also fees, further damages, and/or potential disciplinary actions required to resolve the dispute.

The insurance arbitration process is often touted as being less costly and time-consuming than litigation, but how long does it actually take? While each claim is unique, generally, the timeline for insurance arbitration includes:

Filing For Arbitration 

Unless deemed to be mandatory by the insurance policy, both the insurer and the insured need to mutually agree to arbitration before the process can begin. In doing so, the policyholder will write a request for an arbitration letter. In it, the policyholder will recap the facts of the claim and let the insurance provider know they wish to refer the claim to arbitration. This process can generally take anywhere from one to three weeks.

Selecting An Arbitrator

Once the policyholder and insurance provider agrees to pursue arbitration, both parties are then required to select an arbitrator. In Texas, arbitrators can be attorneys, judges, or those who complete up to 30 hours of training on arbitration and ADR procedures from a college, university, legal trade association, or real estate trade association. However, some insurance policies require the arbitrator to have experience in a senior-level position of insurance claims or underwriting. Arbitrators must be unbiased individuals with no stake in the claim. If the parties cannot agree on one arbitrator, each party may select an arbitrator and those two arbitrators will select a third, unbiased individual to be the umpire.  Often, the arbitrator selection process takes up to three to four weeks.

Obtaining and Sharing Documentation

Once the arbitrator has been selected, the date for arbitration will be set. Once set, the arbitrator will also set a separate deadline for the insurance company and the insured to provide documentation to support the claim. This can include any photos and videos of the property damage sustained, receipts, documents, and/or any other pertinent information on the claim. Generally, the process of relaying this information can take up to four weeks.

The Arbitration Hearing

When the date of the arbitration hearing arrives, the process itself may only last a few hours to a day. During arbitration, the policyholder, insurer, and arbitrator will meet and both parties will present their sides of the case to the arbitrator. Statements on the claim can be presented by both parties and both sides are also subjected to questioning on the claim by the arbitrator. Once complete, the arbitrator will consider all the information provided and determine an award.

The Arbitration Award 

Following the arbitration hearing, the arbitrator will review all documents and statements about the claim and decide on an award. This process generally takes up to two weeks to complete. The award statement will explain the decision and how the arbitrator came to it. The award can be binding or non-binding. If it is binding, both parties agree that the arbitrator’s award cannot be appealed and must stand as is. If it is non-binding, either party can appeal the award by filing a lawsuit.

Insurance Arbitration Attorneys

Although many insurance companies favor arbitration, it can put policyholders in a difficult position to negotiate, as the terms are set by the insurance company. In fact, the policyholder may be entirely unaware that their insurance policy requires mandatory arbitration to resolve disputes, as the insurance quote may not even reference it. With this in mind, commercial policyholders should obtain legal counsel when a dispute over a property damage claim arises.

At Raizner Slania, our commercial insurance claims attorneys have worked with countless policyholders who have been taken advantage of by their insurers through predatory mandatory arbitration clauses. If you could be facing arbitration over your insurance claim, we can help ensure your best interests are protected. Contact us today to see how we can assist you.

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