Arbitration of Car Accident Claims

Arbitration of car accident claims is where an agreed-upon person – the arbitrator – hears the evidence and, judge-like, decides the dispute. All participants are bound by that decision.

Arbitration only occurs when all sides agree to it. You can’t force the insurance company to go to arbitration.

Arbitration is different from mediation. In car accident cases, I recommend that you try to get the insurance company to agree to arbitration because you will be sure of a resolution if you arbitrate. But, if they won’t agree to arbitration, you may want to seek an agreement for mediation before filing your case in court.

Make sure that you know the rules of the arbitration in advance. Either agree to a written set of rules or agree to adopt rules that have been made by some organization such as the American Arbitration Association. (Actually, as I am writing this, the AAA doesn’t have rules for mediating car accident cases, but they are expected to be completed sometime in 2007.)

These are the key things to agree on:

❏ The decision of the arbitrator is final and cannot be appealed. You are going to arbitration because, if you can help it, you don’t want to take the time and spend the money that court will require. You don’t want to lose the time and money savings by getting a favorable arbitration award only to have the insurance company overturn it or delay its payment by filing an appeal.

❏ There will be no technical rules of evidence at the arbitration. Among other things, this means that you can use documents such as medical records and bills without bringing medical experts to the arbitration to be witnesses. In most cases of the size that you should be handling yourself, the cost of a medical expert is prohibitive. Make sure you can also use documents, such as pay records, to prove your loss of income instead of calling people from work to be witnesses to your loss of income.

❏ You may want to agree on a “high-low” agreement. Even if you don't, the insurance company will probably insist on one before they will agree to arbitration. A high-low means that you and the insurance company agree in advance that, no matter what the arbitrator decides, you will not recover more than the “high” or less than the “low” figures that you agreed to. For example, if you agree in advance that you will not recover less than $5,000 or more than $15,000, you would get $5,000 even if the arbitrator awarded less than that but you would receive only $15,000 if the arbitrator awarded more. If the arbitrator awards something between the high and the low, you get the amount awarded. The arbitrator is not told about the high-low agreement.

❏ How will the costs of the arbitration be paid? Will you divide the arbitrator’s fee equally? Will the loser pay? If so, how do you decide who won and who lost? I recommend an equal division of arbitration costs. While the insurance company can run the risk of losing and having to pay all of the arbitration costs, you probably can’t. Seek an agreement for a 50-50 split of arbitration costs. That way you know in advance what your expenses will be and you aren’t at risk of having to pay twice that amount if you lose.

One of the advantages of arbitration is that it can be scheduled much more quickly than it takes to get to trial in court. While getting to trial in court can take months or even a year, an arbitration can usually be scheduled in a month or less.

An arbitration is like a trial.

First, you can make an “Opening Statement,” in which you tell the arbitrator about your case. The defense can do the same.

Next, you put on your evidence. You testify, usually under oath, and explain your case -- how the accident happened, why the other driver is the cause of the accident and all of the harms and damages that you have suffered. Put into evidence documents such as your medical records and bills and your statement of lost income. You can call other witnesses if you want, such as witnesses to the accident if there is a dispute over its cause or friends and family members who can testify about how your injuries affected you.

Next, the defense puts on its evidence. You can cross-examine the witnesses called by the defense, if you want.

After the evidence is presented, you can make a “Closing Argument” in which you explain what you have proven and describe the decision (usually called an “award”) that you want the arbitrator to make. The defense also has a right to make a Closing Argument.

The arbitrator should not decide the case on the spot. Instead, she should take time to review all of the documents and other evidence that has been presented. She should make a written award, hopefully within a short time after the arbitration ends.

❏ Carefully prepare for the arbitration in advance. Remember, if your claim is worth bringing, it’s worth winning. Plan what you want to say when you testify, organize the exhibits that you will put into evidence, go over testimony with any witnesses that you will call, decide what questions you want to ask the insurance company’s witnesses when you cross examine them. Plan your Opening Statement and Closing Argument carefully to make them persuasive.

❏ Pictures are worth a thousand words. Use photos, drawings and diagrams as exhibits to make your points. Use photos of such things as the accident scene, devices such as neck braces that you had to wear (or put the device itself into evidence), all of the empty pain pill bottles to emphasize how much pain you had to deal with. Use your imagination.

❏ Anticipate what the insurance company will argue and be prepared to rebut the arguments. You know what their arguments are from the discussions that you have had with them.

❏ If the insurance company has a lawyer present its case at arbitration, don’t be intimidated. You have a decided advantage over that lawyer. You lived through the situation, she didn’t. You know the true facts.

❏ To impress the arbitrator, be prepared and sincere. Don’t exaggerate. Stick up for your point of view, but stay in control. Argue the facts. You wouldn’t be pressing your case if they didn’t support your point of view.

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