Requests

• Several state governments authorize arbitration as a method of legal dispute resolution for insurance cases. The Delaware Insurance Commissioner, for example, allows a policyholder to request arbitration if the policyholder can't solve a dispute using other methods. The policyholder has to pay a fee in Delaware to use this service, and the state assigns three members to an auto- or home-insurance arbitration panel and one arbitrator to a health-insurance arbitration panel.
  
  

Cost

• Although it's cheaper than going to court, arbitration can still be expensive. An arbitrator in California can charge as much as $400 per hour, as of September 2010; the total cost of a health insurance arbitration decision in the state is around $4,500. When there are several insurance experts on the arbitration panel, the fees will be even higher. Some states subsidize insurance arbitration for state residents.
  
  

Dispute Value

• An arbitration clause may specify a dispute value. For example, the contract may state that either the policyholder or the insurer can require arbitration if the claim dispute involves less than $1,000,000, and both parties must agree to arbitration if the dispute is larger than $1,000,000. When the dispute involves a large amount of money, additional court expenses may be worthwhile.
  
  

Limitations

• The policyholder should check the arbitration terms to determine which types of disputes arbitration can resolve. In South Carolina, for example, a state program provides an auto insurance arbitrator who can settle a property damage dispute but not a dispute about collision and comprehensive insurance coverage or a bodily injury claim. This requirement applies because the South Carolina state program only helps the policyholder win an award from the other driver involved in the accident; the program doesn't help the policyholder win an award from the policyholder's own auto insurance company.