September 2014
Summary: Special arbitration is designed to settle arguments among casualty insurers, self-insurers, and commercial insureds with large retentions or liability deductibles in two types of controversy: co-defendants in a third party claim or suit and overlapping coverage. The cases may involve disagreements over areas such as the respective liability for insurers that cover co-defendants in a claim or suit, the respective liability for insurers that have overlapping coverage in a claim or suit, and coverage for concurrent or primary/excess policies on first- and third-party claims.
Arbitration, as a dispute resolution device, is much less expensive than litigation since use of lawyers is not necessarily required. Unlike litigation, the proceedings are informal and can be brought before an arbitrator in a period of time much less than litigation.
Many insurance companies are part of ADR groups like the Special Arbitration Agreement below. If there is a dispute among insurance companies that belong to the group, the dispute is subject to mandatory, binding ADR. The insurance companies agree to the binding ADR to cut the cost of defense and to resolve issues quickly. The members are all insurers. The decision makers all have experience in insurance, and the dollar value is limited to the policy.
An arbitration award, once rendered, can be turned into a judgment after an appropriate petition to a court of competent jurisdiction. It is almost impossible to overturn an arbitration award unless there is some action by the arbitrator that is an abuse of the law.
The special arbitration agreement consists of a compulsory and a voluntary section.
Topics covered:
Article second – exclusions
Article third – decisions
Article fourth – non-compulsory provisions
Article fifth – AFs function and authority
Article sixth – withdrawals
By signing this Agreement, the company accepts and binds itself to the following:
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