It's not uncommon for a policyholder to disagree with his auto insurance company on the damages of a vehicle or injury. As a matter of fact, in regards to liability, two opposing auto insurance companies often don't agree either. For this reason, procedures are in place that allow an non-partial third party to step in and negotiate a final settlement. This procedure is called "arbitration."
Two different types of arbitration exist in the world of insurance: Policy holder initiated arbitrations and interinsurance company arbitrations. Both arbitrations have different processes, but the same goal. The goal is to get two disagreeing parties to find a common ground and settle a claim.
Policyholder initiated arbitrations normally have to do with vehicle repair amounts and uninsured motorist bodily injury settlements. After a written request is sent to the insurance company asking for arbitration, the policyholder will hire his own attorney who will work with the insurance company to find an arbitrator. This arbitrator meets both the policyholder and his attorney along with the insurance company and their attorney at a common place. Most states actually have designated offices for arbitration. While both parties are in separate rooms, the mediator reviews the evidence. He goes back and forth to each party attempting to get an agreed amount. The arbitrator uses his own analysis of the evidence to coax each party toward a settlement. If a settlement amount is reached, it is normally "binding" which means it cannot be overturned later. This is the normal way a majority of policyholder initiated arbitrations are held. On occasion, both parties opt not to meet. In these cases, the evidence is just sent to the arbitrator with the agreement that his decision will be the final, binding settlement. This process is similar to what happens in interinsurance company arbitrations.
Interinsurance company arbitrations occur when two different auto insurance companies cannot agree on liability (or fault) and both parties are members of an interinsurance company arbitration association. Arbitration is initiated when one of the insurance companies submits the official arbitration form to the interinsurance company arbitration association. This form asks for details about the other insurance company, accident and any offers to settle. It gives each insurance company a chance to plead their case on paper and provide evidence to support it. After the filing is received, a date is set. Then, one to three non-partial panelists review the evidence. Normally, they are individuals who work within the industry such as claims adjusters. These panelists decide who is liable (or at-fault) for the accident and then award settlements based on damages. The final decision is binding.
Even after arbitration, some parties aren't happy with the settlement. It usually is the person who loses or compromises the most on the settlement amount. However, currently, this is the best way for disputing parties to come to an agreement and close out a longstanding claim.