Insurance Arbitration

What Is Arbitration?

Arbitration is a private way to settle an insurance dispute without going to court. You and the insurer present evidence to a neutral arbitrator, who reviews the policy and facts and issues a written decision.

Arbitration is typically used for coverage disputes, not dollar amount disagreements, and is often binding. It’s also usually faster and more predictable than a lawsuit.

What Does Arbitration Mean for Beauty and Bodywork Professionals?

Suppose the insurer denies or partially denies a claim related to your services, and you believe it should be covered. In that case, arbitration is designed to deliver a final answer without going to court. It’s private, usually quicker than a lawsuit, and focused.

You will need organized proof of your case, and you may be responsible for some associated fees. For valuation-only disagreements, use the appraisal clause instead.

What’s the Difference Between Arbitration and Appraisal?

Arbitration clauses are for disputes over your policy’s rules. Appraisal clauses are used to resolve disputes regarding settlement payment amounts (i.e., money).

Arbitration = coverage and policy disagreements.

Appraisal = price, valuation, and settlement amount disagreements

Feature	Appraisal Clause	Arbitration Clause
Main Purpose	Settles disputes about the dollar amount of a loss	Settles broader disputes about coverage or fault
Who’s Involved	Each side picks an appraiser; an umpire may decide if they disagree	A neutral arbitrator or panel makes a decision
Outcome	Sets the dollar value; coverage terms and limits still apply	Usually binding with limited appeals
Common Use	Used in property damage claims	Used in liability or contract disputes

Feature: Main Purpose

Appraisal Clause:

Settles disputes about the dollar amount of a loss

Arbitration Clause:

Settles broader disputes about coverage or fault

Feature: Who’s Involved

Appraisal Clause:

Each side picks an appraiser; an umpire may decide if they disagree

Arbitration Clause:

A neutral arbitrator or panel makes a decision

Feature: Outcome

Appraisal Clause:

Sets the dollar value; coverage terms and limits still apply

Arbitration Clause:

Usually binding with limited appeals

Feature: Common Use

Appraisal Clause:

Used in property damage claims

Arbitration Clause:

Used in liability or contract disputes

How Does the Arbitration Process Work?

If there’s a dispute about what your policy covers, first check your policy to confirm it has an arbitration clause. Read the rules about the arbitration process and timelines. The process typically follows these general steps:

Send a brief written notice describing the dispute
Select an arbitrator by agreement or per the policy’s outlined procedure
Exchange evidence (policy pages, denial letter, emails, receipts, photos, serials, expert notes if needed)
Attend a hearing, where each side presents information and an arbitrator may ask questions
Receive a decision, and if the arbitrator decides in your favor, the insurer pays according to the policy terms and limits

How Do I Prepare Evidence for Arbitration?

Collect as much documentation as possible to support your case. Remember to focus on concise, factual information, and include things like:

Your policy documents: the declarations, endorsements, exclusions, and note the parts you’re relying on
Claim information and correspondence, including denial or coverage letters, and other key emails
Incident documents, like client intake and consent forms, treatment notes, waivers, and incident or police reports

Keep all your documentation as organized as possible to help keep the process moving.

Is Arbitration Binding or Can I Appeal?

Most insurance arbitration is binding, meaning the decision made through arbitration is final, with few exceptions. Non-binding arbitration exists in some policies or states, but it’s less common. Read your policy’s clause for exact deadlines, rules, and fee responsibilities.

Related Terms

Appraisal clause
Adjuster
Deductible
Endorsement