What Happens when Auto Insurance Companies Disagree on a Liability Decision?

Being in a car accident is stressful enough when you are dealing with a damaged car, possible injuries or just a bruised ego, but when insurance gets involved it can get even worse. Once your accident has happened and you report a claim to your car insurance company there will be a domino effect of things that will happen to settle the claim. Insurance adjusters from all involved parties will contact all parties involved to get statements about the accident and much more. Once all the information is gathered a liability decision will be made, but sometimes that isn't the end.

In the majority of car insurance claim situations there is a consensus or majority decision made between the two car insurance companies. Nobody disputes how the accident happened in this situation and all parties settle the claim and move on with their lives. In the other cases the insurance companies, as well as the parties involved, will dispute the facts of the accident and cause two separate liability decisions to be made by the insurance companies. This will lead to process called arbitration to settle the differences between the companies.

"Arbitration" is defined by the AICPCU (American Institute for Chartered Property Casualty Underwriters) as follows: "An alternative dispute resolution (ADR) procedure that takes a dispute to an impartial third party (an arbitrator or arbitration panel) for a decision the parties agree will be final and binding." The last few words of that definition may be the most important parts of the definition, the decision made in arbitration is "final and binding".

The process usually starts a few months after the adjusters make their decisions and both insurance companies consent to the arbitration process. Policy holders like you consent to this process in your policy and you defer the decision to go to arbitration to your insurance company. Once both companies consent they will both decide on one arbitrator and then those two people will select a third arbitrator. There are other instances where panels have been pre-selected from a group of licensed and qualified adjusters in the field.

Once the arbitration panel has been settled both insurance companies will submit their entire claim file to the panel and allow a preset amount of time for discussion. The panel will consider all of the information and then make a decision about the accident based on the information submitted. At the time the decision is made your claim is officially done from the insurance standpoint and there is no where else to appeal to in order to change a decision.