"Alternative dispute resolution" is a phrase used to describe various methods of resolving conflict prior to litigation. In personal injury claims, if a claimant and insurance adjuster can't come to a settlement agreement, they can use one of these alternative methods to resolve the claim.
You may reach a point in negotiations where the likelihood of a settlement seems remote. The insurance company may have entirely denied your claim, or their final settlement offer may be unreasonably low.
This isn't the end for your claim. Even if you can't find an attorney to accept your case, you still have several options for recovering compensation. The three most common are small claims court, mediation, and arbitration. Let's take a closer look at these 3 options...
Small claims courts were originally designed to settle disputes without lawyers. The procedures are relatively simple, and people without formal legal training can have the same benefits insurance companies and lawyers enjoy in higher courts.
The cost of filing a small claims lawsuit is low, with filing fees around $100 or less. Also, the time it takes to have a case heard is much faster than in the higher courts.
When you file a small claims lawsuit, you don't sue the insurance company directly. Instead, you must sue the actual party liable for your injuries. If there's more than one liable party, you can add them to the same lawsuit as an additional defendant.
How to File a Small Claims Lawsuit
Most small claims courts provide a form for you to fill out to begin the process. The form serves as your plaintiff's petition, where you state the defendant's name and address, and write a short summary of the events that resulted in your injuries. Go to your local courthouse to file the form.
Once you file the petition, it proceeds almost the same as a lawsuit in a higher court. Depending on your local court's rules, the defendant will be notified of the trial date, either by certified letter or by being served by the local sheriff or constable. You'll also receive a letter with the trial date.
What happens at a small claims trial?
When your trial date arrives, you'll bring any witnesses and evidence you want the judge to consider. Although some small claims courts permit you to have a jury hear your case, it's often faster to waive the jury and have a judge hear it.
In small claims court the rules of evidence are quite relaxed, so you don't have to worry about making objections or quoting any statutes. Take some time to practice presenting your case before trial. Have a friend act as a mock judge and ask you clarifying questions. You want to be as comfortable as possible with the facts of your case.
The defendant will have notified their insurance company of the lawsuit, who may send a company attorney. Judges in small claims courts aren't usually impressed by attorneys. Most judges only want to hear the facts of a case. Their verdict should be based solely on the facts, and not on any legal argument made by an attorney.
Small claims trials are quite brief, taking anywhere from a few minutes to a couple of hours. The verdict is rendered immediately. If you win, the insurance company will be ordered to send you a check. It will include the verdict amount and reimbursement for your filing fees.
The defendant usually has the right to appeal the verdict to a higher court, but because of the additional lawyer's fees, insurance companies often won't appeal a minor payout. If you lose, you also have the right to appeal to a higher court. But for that, you'll need an experienced personal injury attorney to handle the case.
Mediation is a process by which you and the insurance company both agree to have a neutral third party (called a "mediator") come in to help resolve your settlement dispute. The mediator's fee must be shared equally by you and the insurance company, and unless you and the company agree to accept the mediator's decision, it's non-binding.
Many insurance companies won't agree to mediation for minor personal injury claims. This is because paying to mediate a small amount of compensation isn't cost-productive for the insurance company. They often prefer arbitration.
If you have a no-fault insurance policy with a clause permitting you or the insurance company to request mediation, asking for it may convince the adjuster to settle your claim.
What happens in a mediation?
The mediation process begins when you and the insurance company agree on a mediator. You can find a list of mediators in your local phone book, or on a website like Mediate.com. By process of elimination, you and the insurance company will settle on one mediator to hear your dispute.
Normally, the mediator's fees must be paid in full before the mediation takes place. Some will accept a partial amount to begin, and the balance at the conclusion.
The mediator listens to both sides of the claim. Her job is to do whatever she can to facilitate an agreement both parties can live with. When the mediator successfully facilitates an agreement, the insurance company will usually abide by it. It's simply not worth it for them to take the claim to the next level.
Like mediation, arbitration involves you, the insurance company, and a neutral third party (called an "arbitrator"). But unlike mediation, the arbitrator's job is not to facilitate an agreement. They're more like a judge who makes a final ruling. You can find out more at the American Arbitration Association's website, ADR.org.
An arbitrator will listen to both sides present their case. Then she'll end the arbitration and notify the parties of her decision by mail within a week or two.
There are two types of arbitration, binding and non-binding. A binding decision usually can't be appealed. Once the arbitrator makes her ruling, both parties are bound by it. In most personal injury arbitrations, the decision is binding.
Arbitration is the most demanding method of alternative dispute resolution. Certain aspects of the arbitration agreement must be negotiated before the actual process can even begin. It's advisable to have an attorney on your side to help you with the specifics.
Arbitrating First-party Claims
If you're in a conflict with your own insurance company, such as in a no-fault situation, you may have no choice but to arbitrate the dispute. The right to call for arbitration is often contractual, meaning it's written into an agreement, like your insurance policy. The Arbitration Clause likely states that either party has the right to have a contested matter arbitrated.
When the right to arbitration exists, it can be initiated by you or the insurance company. If you want to arbitrate, tell the adjuster and put your request in writing. The request alone may be enough to get the adjuster to settle. Like mediation, the costs of arbitration can be high, so settling the claim is often in everyone's best interest.
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