Car Accidents
Insurance companies would much prefer to arbitrate their personal injury cases in Maryland. Arbitrations require less time spent by the insurance companies’ lawyers and, if mandatory, would deprive Maryland personal injury auto accident victims of the right to present their case to a jury of the victim’s peers.
Accordingly, insurance companies have attempted to write into the insurance policy language an arbitration clause when the insured person needs to bring a claim with their own insurance company because of personal injuries suffered as the result of an uninsured or underinsured motorist.
Some states allow this. In fact, arbitration is required in uninsured motorist cases in Illinois, Colorado, California, and Massachusetts if the policy language requires arbitration. Texas is reportedly considering such a rule. But, in Maryland and 22 other states, insurance companies are prohibited from imposing arbitration. A statute – § 19-509 of the Maryland Insurance Code – forbids insurance companies from inserting binding arbitration clauses in insurance contracts with their own insureds. In other words, Maryland public policy rewrites these contracts.
This is a good rule. Maryland’s court system is a good one. It has well-established rules of evidence and procedural safeguards that plaintiffs will not get in arbitration, even with a fair and reasonable arbitrator because, by definition, the arbitration is a shortcut procedure to justice.
Arbitration Is a Good Idea in Some Car Accident Lawsuits
Mandatory arbitration is a bad idea. But arbitration on agreed-upon terms can be an excellent path to resolve a car accident case. Our law firm arbitrates (and mediates) many personal injury car accident cases with insurance companies because it is often an effective means of resolving disputes. But we do so on our terms without bowing to the insurance companies and their handpicked arbitrators.
What Is a High-Low in a Car Accident Arbitration?
Insurance companies will universally require a cap on the policy limits if the case goes to arbitration. So no matter what the arbitrator awards, the award is capped at the policy limits. But you get something in return for that. Usually, you get an agreed-upon dollar amount (called a “low”), so no matter what the arbitrator’s award is, you will receive that low from the insurance company even if the arbitrator’s award is zero. The way it works is the arbitrator is not told what the high-low agreement is. So the arbitrator just gives an award, and the award amount is conformed to the high-low.
When Is Arbitration a Good Idea in a Car Accident Case?
Arbitration works for victims when the deal is right. The key is almost always a high-low agreement. But another critical factor is who is selected as the arbitrator. The insurance company proposed a list of usual suspects that are invariably slanted to the insurer. You need an arbitrator who is fair and not financially or otherwise indebted to the insurance company.
Things to Fear When Picking an Arbitrator
Some believe – our accident lawyers believe – that arbitrators are generally inclined to favor insurance companies because these companies are often “repeat players” in the arbitration process. Due to the nature of their business, insurance companies frequently engage in arbitration. So in the arbitrator’s world, the insurance companies have market share. So too many arbitrators have a subconscious, sometimes conscious, incentive to rule in favor of insurance companies to ensure future business.
So the compensation structure creates bias. If arbitrators are paid by the hour or by the case, and insurance companies are frequently involved in arbitration, there might be a financial incentive to rule in ways that keep them favorable to these frequent clients.
Even setting aside the money bias, there is also the friendship bias too, right? These arbitators see the insurance defense lawyers. A lot. It makes them more friendly with each other. That makes them – again, both consciously and unconsciously – biased against you.
Pick an arbitrator with a past history of calling it straight.
Alternative Dispute Resolution – Mediation
Beyond arbitration, there are other methods of ADR, like mediation. Unlike arbitration, where the third party makes a decision, mediation involves a neutral third party helping the disputing parties reach an agreement. Understanding the differences and choosing the best method for the specific situation is essential.
Mediation is often a good path in severe injury and wrongful death claims. But these mediators can make upwards of $750 an hour. So it needs to be the right case to justify the expense.
How Does Mediation for a Car Accident Claim Work?
Here’s how a typical car accident mediation process works:
Agreement to Mediate
Before mediation can begin, all parties involved must agree to participate. This can be a voluntary decision or be based on a clause in an insurance policy or a court order. Sometimes the pretrial judge will take this role seriously. Other times, the judge will just say, “Oh, you can’t settle, let’s pick a trial date.”
Selection of the Mediator:
The parties choose a mediator. This person should be neutral and typically has experience or training in mediation and personal injury law. Read the things to fear when picking an arbitrator section above.
Again, it can also be the trial judge or the pretrial judge. If it is, just remember you know your case better than they do. Our lawyers have had judges give long explanations about here in this little corner of the world, a jury will never give you what you have demanded. And then we go out and get ten times that amount. Sometimes, you have to completely ignore what the judge is saying. Is this socially awkward? Yes. Do it anyway.
Initial Joint Session
The mediation often starts with parties and their attorneys in the same room. The mediator might begin by laying out the rules and goals of the mediation. If there is hostility, this step gets skipped. Ten years ago, lawyers used to give little opening statements at a mediation. You do not see this is much post-COVID.
Caucusing
After the joint session, the mediator may separate the parties into different rooms. The mediator will shuttle back and forth, communicating offers and counteroffers and providing insight into each side’s position. A little bit of shuttle diplomacy. Often, you never see the other side again unless the case settles.
Negotiation
The mediator will facilitate negotiations by suggesting solutions, clarifying misunderstandings, and sometimes playing the devil’s advocate to challenge each side’s positions. Their role isn’t to decide who’s right or wrong but to help both parties reach a mutually agreeable solution.
Agree To a Settlement Amount
If both parties can agree on a resolution, the terms are usually put into writing then and there. This document may not be a formal legal settlement but an “agreement in principle.” Later, a more formal settlement agreement will be drafted and signed.
No Settlement
Not all mediations result in an agreement. If parties cannot reach a settlement compensation agreement, you try again or head towards trial.
Confidentiality
One of the hallmarks of mediation is confidentiality. Invariably, the mediator will have you sign something saying nothing here can be used at trial (and that you can’t subpoena the mediator for what was said).
Cost of Mediation
Mediation is often less expensive than going to trial. The main costs are the mediator’s fees, which can be split between the parties, and the attorney’s fees. But if the other side is desperate for mediation, our lawyers will make them pay for the whole thing,
Back to Mandatory Arbitration for a Second
These are a few states that require mandatory arbitration for uninsured motorist benefits and how the law in that state works.
- California: Auto insurance policies providing for uninsured motorists coverage are required to provide that the determination as to whether the insured is legally entitled to recover damages is to be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration conducted by a single neutral arbitrator. If the insured makes a Section 998 settlement offer that is not accepted, and the arbitration award is more than that offer, the victim is not precluded from recovering additional costs even if the final number exceeds the coverage limits.
- Colorado: If the insurance policy contains language that requires arbitration before the insurer is obligated to pay uninsured motorist benefits, Colorado law will enforce this agreement. The insurance company is obligated to pay for the arbitrator.
- Illinois: The Illinois Insurance Code requires that no motor vehicle insurance for uninsured motorist benefits can be renewed, delivered, or issued for delivery unless there is language that requires any dispute concerning the coverage and monetary damages to be submitted for arbitration to the American Arbitration Association.