State Farm Arbitration Process

State Farm Arbitration Process

State Farm Arbitration Process

If you were injured in a car accident that wasn’t your fault, you can reasonably expect the insurance company to cover any medical bills, lost income, and damage to your car. But the facts of the case and estimates of ongoing expenses are often in dispute, at which point you may find yourself in the State Farm Arbitration Process

Arbitration is an alternative to litigation (hearing the facts in court before a judge who will ultimately make a final decision), where a neutral party is selected to hear all the facts and come to a final judgement.

Arbitration is used a lot in business or family disputes, but car accident arbitration is also a very commonly used tool to settle disputes without going to court. State Farm requires all its customers to sign an arbitration clause, so if a settlement is filed and there are facts in dispute, you can expect to find yourself in an arbitration hearing. 

Below is more information about the State Farm arbitration process.

State Farm Arbitration Clauses

A car insurance policy is essentially a contract between you and the insurance company, in this case State Farm. Arbitration is faster and cheaper than going to court, so most auto insurance companies have some sort of arbitration clause requiring that any disputed facts of a car accident settlement be decided using arbitration. 

There are 2 different types of arbitration:

  • Binding: The arbitrator’s decision is final & binding, with no opportunity for either party to appeal.
  • Non-binding: Both parties have the option to either accept the arbitrators decision or appeal and continue the process. 

Your State Farm auto insurance policy should have a section called ‘alternative dispute resolution.’ In it you’ll likely find language along the lines of:

“Any controversy or claim arising out of, or in any way relating to this insurance contract between the insured and the insurance company, which cannot be settled between the parties must be submitted to binding arbitration as part of the alternative dispute resolution process.”

This is binding arbitration clause and means that if you’ve signed the contract with State Farm, you’ve agreed that any issues you have with the settlement offer will be handled by an arbitrator, and their say is final and binding.

If you can’t agree on your settlement offer and they won’t increase it, you can either walk away with nothing or submit your arbitration claim. However, a claim that goes to arbitration costs State Farm more money, so the threat and/or prospect of arbitration may cause some insurance companies to increase their offer rather than deal with the expenses and lost hours of arbitration. 

Car Accident Settlement

State Farm Arbitration for 3rd-Party Claims

When a car accident claim is filed with the other driver’s policy, it’s known as a 3rd-party claim. By law, insurance companies aren’t allowed to force 3rd-party claimants into the arbitration process. If settlement negotiations or there are facts in dispute, a lawsuit can be filed. 

However, in most 3rd party claims arbitration is still much cheaper and easier, making it a much better choice than filing a car accident lawsuit. Talking to a personal injury attorney can help determine if you are better off going to arbitration or filing a lawsuit.

Benefits to Arbitrating Your Car Accident Claim

  • Arbitration costs less a lot than litigation.
  • Arbitration doesn’t have monetary limits found in small claims court, which often cap recovery at $2000-$3000.
  • Arbitration takes a lot less time than going to court.
  • You have a say in who arbitrates the case, whereas you don’t pick your judge. 
  • Rules of evidence in arbitration are less stringent than in most lawsuits

What Happens During the State Farm Arbitration Process

Arbitration hearings are informal but tend to follow this framework:

  • Opening statement: Introduce yourself, provide a description of the car accident claim, and say what your goal is during the arbitration.
  • Case presentations: Present your evidence to the arbitrator and make your case. Show proof of your damages. If you are in dispute with the other driver’s insurance provider, you must prove negligence by the at-fault driver.
  • Closing statements: After you and the insurance company have presented your arguments, you end the session by summarizing your case’s strengths. You also tell the arbitrator why you should receive compensation.

You and the insurance company receive notification in writing of the decision. This usually happens in one or two weeks.

State Farm usually has binding arbitration, so once the arbitrator renders their decision, that decision is final. 

Do I Need an Attorney For The Arbitration Process with State Farm?

You don’t need an attorney for the state farm arbitration process, but having an attorney by your side is never a bad idea when dealing with contract disputes. The insurance company will have an attorney, but in most cases the attorney’s role in arbitration is fairly limited.

If the facts are strong in either direction, having an attorney probably won’t move the needle in one direction or another. But a skilled car accident attorney will be better at presenting those facts, which can be especially important when there is unclear liability or wide variances in estimates of ongoing medical expenses. . 

Get Legal Help With the State Farm Arbitration Process

Lawsuit Info Center can help you find an experienced personal injury attorney in your area. Use our site to find a licensed attorney near you today. If you are working with another insurance company, see our pages on the USAA Arbitration Process or the Progressive Arbitration process.

Frequently Asked Questions about car accident settlements

State Farm Arbitration

If you win the case, State Farm will issue a settlement check within 14 days.

One disadvantage is there is no formal evidence process. This means you must rely on the experience and skill of the arbitrator to understand the evidence.

There are five significant steps in the arbitration process: Initial pleadings, arbitrator selection, scheduling, discovery, trial preparation, and final hearing.

Car Accident Settlement

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About Jessica Board, ESQ
Jessica Board is a graduate of the University of Iowa School of Law and is licensed in Iowa, Nebraska, and South Dakota. A member of the ABA Young Lawyer division, Iowa organization of Women Attorneys, and Defense Research Institute. With an undergraduate degree in finance, Jessica is passionate about educating individuals about how the law can help them recover the compensation needed to fully recover from injuries.