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The Alarming Arbitration Trend Negatively Impacting Insurance Customers

Arbitration is an important aspect of resolving contract disputes. Although it can be a useful tool, an alarming arbitration trend that limits a customer’s ability to sue for injuries has been growing within the insurance industry. It’s important to understand any contract you enter with your insurance agency, and how arbitration can impact a potential case.

What Is Arbitration?

Arbitration is a way to settle contract disputes without litigation. Arbitration occurs when the dispute is brought before an unbiased, disinterested third party, known as an arbitrator, for resolution. The arbitrator hears evidence presented by both sides and renders a decision, much like a judge would.

However, arbitration is considered a form of alternative dispute resolution because it avoids court. Taking a trial to court is very costly. Arbitration is a way to reach contract resolutions without litigating the case in open court.

Binding Arbitration

Binding arbitration refers to how permanent or “binding” the arbitrator’s decision is. Decisions made in binding arbitration cases are typically not subject to appeal. Most of the time, contracts that contain binding arbitration clauses state both parties give up their right to take the case to court.

Many insurance companies have been sneaking binding arbitration clauses into the fine print of their contracts. If a contract dispute arises, the customers have already agreed to send the case to arbitration, and have no way of backing out.

Then, because the results of the arbitration are binding, the customer is forced to accept the results of the arbitration. Customers are not allowed to sue their insurance agencies for damages because they have already signed a contract that stated their arbitration hearing was final.

Florida Supreme Court Sides With Customers

Earlier this year, the Florida Supreme Court heard a case involving binding arbitration. The case was based on a medical malpractice suit. The Supreme Court voted 5-2 to invalidate an arbitration agreement between a patient and her specialty provider, an ob/gyn group. The court found that the binding arbitration agreement was “clearly favorable” to the ob/gyn group, and voided the agreement.

Know What You’re Signing

When signing any contract, it’s important to read the fine print and understand what exactly you’re giving and receiving as a result. It may be beneficial to have an experienced attorney review your contract. Attorneys may better understand the language and implications of the contract and can give you advice on how to proceed.

Although Florida courts have been siding with insurance customers in binding arbitration cases, the situation can be avoided entirely if you never enter the contract in the first place. Having to litigate a binding arbitration contract with your insurance company could quickly turn expensive.

Additionally, even though Florida courts recently established precedence for binding arbitration disputes, each case varies. Your case may not be a guaranteed victory. Why risk that in court? Review your contracts, and get help if you are struggling to understand certain terms and conditions of the contract.

Attorney David Goldman has a strong belief that everyone should be treated fairly and those with the means should do what they can to bring justice in all areas of our society. That belief has led him to help Florida's injured from being taken advantage of by corporations and insurance companies. Since 1989 David Goldman has been fighting for the rights of Floridians both as an attorney and by personally supporting our community.

The Alarming Arbitration Trend Negatively Impacting Insurance Customers

Goldman Babboni Fernandez
Murphy & Walsh

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