Negotiation, Mediation, Limitations
Alternative Dispute Resolution
As with other lines of insurance, some auto policies contain Alternative Dispute Resolution (ADR) provisions.
The ADR issues that need to be considered are:
- How does the policy call for the appraiser or arbitrator to be chosen?
- Who pays the cost of the ADR services?
- Are experts permitted to give their opinions, and if so, who pays for the cost of the experts?
- What are the issues that the appraiser or arbitrator is empowered to decide?
- Is it just dollar amounts, or coverage issues, misrepresentation allegations or bad faith questions, as well
- Are decisions of the appraiser or arbitrator final and binding, or can they be appealed? If so, then to whom?
Negotiating is really about five things:
- Knowing the facts cold.
- Understanding your rights.
- Being a good listener.
- Advocating your position effectively.
- Being firm but reasonable.
If you have prepared and documented your claim carefully, and you know the ins and outs of your policy, you are way ahead of the game. Understand not only your position, but the company’s position as well. What are they saying and why are they saying it? Are they wrong? If so, why exactly? What would be the most effective way of convincing them to change their position? And if not, how should you go about reevaluating your position?
Many negotiators believe you should start out with a high demand. Otherwise, you have nothing to bargain down from and you run the risk of creating an early impasse or of winding up with much less than you are entitled to, simply because bargaining is a part of the process.
Others say that an unreasonably high demand creates an antagonistic atmosphere and that it is an artificial and counterproductive tactic.
Either way, there is no substitute for painstaking preparation and analysis. That way, when you make a demand, you can back it up with the necessary facts and arguments.
If reasonable attempts to negotiate a resolution of the claim fail, most policies either require appraisal, mediation, or arbitration. Many ADR provisions, as written by the insurance company, are expensive, time consuming to administer, and limited in what they can accomplish.
While you are considering the resolution approach you wish to take, there is another thing you should look up in the policy: the “contractual limitations period.” Some policies contain provisions restricting your ability to recover benefits by requiring that any “claim” be filed within a certain time (typically one year) of the date of the loss (state law usually gives you one or two years from the date the claim is denied. But, if your insurance contract says something different and you signed it, then the insurance contract may control).
If your policy contains such a provision, watch out. It could mean that unless you do file a claim against the company within the designated period, you lose all right to do so.
Things you should not do include:
- DO NOT cash partial checks from the insurance company unless you have a statement in writing that this is only a partial payment and that you are not releasing the company from further obligations.
- DO NOT under-settle your claim. Be fair and reasonable. But if you are right, stick to your guns and do not be intimidated.
- DO NOT make threatening phone calls or write intemperate letters
If, in cases where the amount in controversy is substantial, you are unable to resolve the claim directly with your company, you should then consider contacting an outside mediator. You can do this whether your policy has an ADR provision in it or not.
Mediation is a process whereby an independent third party, chosen by the agreement of both sides and experienced – in this case in insurance matters – steps in and tries to facilitate a resolution of the disagreement. Mediation, unlike certain types of arbitration, is not binding. No decisions are made by the mediator. Instead the mediator simply tries to bring the two opposing sides together in a joint effort to avoid litigation.
There are professional mediators available through organizations such as The Judicial Arbitration and Mediation Services (JAMS), and other organizations which promote mediation services.
Be sure your mediator is objective and does not have a built-in tendency to favor one side or the other.
In rare instances you may want to submit any disagreements to binding arbitration. Unlike Mediation, binding arbitration is final. It is a substitute for a judge and jury – but without a right to appeal. In some instances it has advantages over the legal process. It is faster, less expensive and less formal. Rules of evidence can even be waived. But it is entirely dependent on who the arbitrator is, how he or she is selected, and what rules and procedures are agreed to by both sides. Be very careful as to these matters. Some binding arbitrations end up with terribly unfair outcomes. On the other hand the same is true for jury or judge trials.
Statutes of Limitations
Note carefully that there are provisions under the laws of every state that place absolute restrictions on the length of time a person has to file a civil suit for damages. These laws are called statutes of limitations. The time limits imposed depend on the legal theories involved. For example, the statute of limitations for a breach of contract case may be different from the statute of limitations negligence, misrepresentation or fraud causes of action.
In addition, there are often limitation provisions in the insurance contracts themselves. Many policies impose such contractual restrictions, for example, on how long an insured has, following a claims denial, to file a claim or suit against the company. This is known as a contractual limitation. If your agreement or contract has such a provision and you do not file a lawsuit within the time period set forth, you may lose all of your rights to recover anything on your claim – regardless of how valid it might be.
You must take these provisions very seriously. They are often strictly enforced.