What type of disputes can arbitration resolve in relation to auto insurance?

Arbitration is a method used to resolve disputes outside of court, particularly popular in auto insurance cases due to its efficiency and lower costs. It is often employed in relation to Uninsured Motorist (UM) and Underinsured Motorist (UIM) claims. These types of disputes arise when an insured party seeks compensation for damages or injuries caused by a driver who lacks sufficient insurance coverage.

The reason why this choice is the correct choice lies in the nature of UM/UIM claims. When a policyholder is involved in an accident with a driver who is uninsured or underinsured, the situation can lead to complex negotiations, especially regarding the amount owed to the injured party. Arbitration serves as a streamlined process to resolve these specific disputes, allowing both parties to present their cases and have an impartial arbiter make a binding decision. This can be particularly important when determining the extent of damages and the compensation owed.

In contrast, medical payments, property damage, and bodily injury claims may not always go through arbitration and can often be settled through traditional negotiations or litigation processes. While arbitration can indeed apply to a variety of disputes within auto insurance, UM and UIM claims frequently rely on this method due to their unique circumstances and the necessity for a fair resolution when facing challenges