The biggest distinction between filing a lawsuit against an individual for a car accident and filing an uninsured/underinsured motorist claim (UM/UIM claim) against an insurance carrier is that the latter will be sent to arbitration for adjudication. Illinois law requires insurance companies to include arbitration clauses in all insurance contracts containing UM coverage (215 ILCS 5/143a). Additionally, many insurance companies have arbitration clauses in their UIM insurance contracts. Illinois utilizes arbitration as a means of providing a more efficient means for those with a UM/UIM claim to have their case heard and have a just decision reached. Medical bills from a car accident add up quickly. The sooner a result can be obtained, the better.
To initiate the arbitration, the insured’s counsel must send a written demand for arbitration to the insurance company. The demand for arbitration is akin to filing a lawsuit. The demand must be clearly stated and sent within the time specified by the insurance policy. The demand should include information about the insured and name the insured’s arbitrator. The Insurance company will then name their own arbitrator. Then, both arbitrators will select a third “neutral” arbitrator within forty-five days to complete the panel. If the third arbitrator is not selected within the allotted time, either party may request that the case be sent to the American Arbitration Association (AAA). Some insurance contracts provide that all UM/UIM arbitrations be sent to the AAA. When the AAA hears the arbitration, they may choose to use a single arbitrator, or a panel of three.
In an uninsured motorist claim, the insurance company may request that the insured file suit against the uninsured, at-fault driver. Illinois law requires the insurance company to make such a request in writing, for good cause, and to advance any trial costs to the insured prior to trial. The insurance company must also send a written acknowledgment of the claim and the demand for arbitration. It is important for a lawyer to thoroughly examine such an acknowledgment for any denials of coverage, conditions, or other claims that might either limit or terminate the insured’s right to recover.
Unlike a trial where all of the issues of fact and law should be decided, the power of the arbitrators to decide a dispute is more limited. The arbitrators only decide the liability of the uninsured/underinsured driver, and decide the damages suffered by the insured. Any questions about whether the insured’s policy was in place at the time of the accident or whether the other driver actually was uninsured will not be decided by the arbitrators; instead, these issues should be handled by the courts.
Generally, the arbitration will be governed by the AAA’s rules. These rules grant the arbitrators the power to order pre-arbitration discovery. The AAA also has rules of evidence which allow the parties to present any evidence that is relevant and material. However, if the amount demanded is in excess of $20,000.00, any medical opinion testimony is governed by the Rules of Evidence, and requires either live testimony or an evidence deposition for the physician.
The arbitrators’ decision is binding, and it will not be overturned on appeal for errors of law or fact or for minor violations of the rules. However, if the arbitrator awards more than $50,000.00, either party can dispute the arbitration award and demand a jury trial. An insurance company may elect to do this if it feels the amount of the arbitration award was excessive. An insured may elect to do this if he/she believes the arbitration award will not be adequate to cover his/her bills. This “escape hatch” is provided by statute in uninsured motorist claims, but must also be provided in the insurance contract for an underinsured motorist claim.
Arbitration of a UM/UIM claim can be very complicated. It is important to have competent counsel that understands how arbitration works in order to protect your rights. If you have a UM/UIM claim, please contact an experienced attorney so that your rights are protected.