Mediation Guide For Insureds

Mediation is a voluntary and non-binding extrajudicial methodology that allows the insured to negotiate a solution to their disputes with the insurance company. Mediation can be cheaper and more effective in resolving disputes over differences in criteria regarding the coverage agreed upon by both parties. Additionally, the experience and skills of the mediator are crucial in achieving understanding and subsequent agreement between the parties.

In general terms, representatives of an insurance company are trained in negotiation, mediation, and litigation techniques, while the insured are not. Therefore, it is important for the mediator to be fair and attempt to balance the power dynamics between the parties as much as possible. Both the insured and the insurance company can use mediation to determine the validity and credibility of arguments and evidence. Mediation can provide an approximate idea of what might eventually happen in ordinary court. The duration of a mediation can vary from one hour to one or several days.

It is important to remember that mediation is not a binding extrajudicial method. If you believe that the insurance company is not offering you enough during the mediation process, you are not obligated to accept their proposals. The better prepared you are for mediation, the greater the chances of reaching an agreement. Be prepared for the long haul; many issues are resolved several days or weeks after mediation. Mediators employ a variety of techniques to lead the parties toward a mutually acceptable solution. It is a common technique for mediators to start the process with a joint meeting with the involved parties, then move on to separate meetings with each party to minimize confrontation and maximize constructive dialogue with and between the parties.

Here are your options in mediation:

1. Private professional mediator
2. Mediator appointed at the request of the Court
3. Mediation program proposed by the regulatory agency for insurance products in your state

Who pays the mediator’s fees?

1. The fees can be split equally between the parties.
2. The insurance company pays the mediator’s fees.
3. The insurance company advances the mediator’s fees, but the insured agrees to refund half of the fees previously advanced. Try negotiating for the insurance company to pay the full amount of the mediator’s fees if there is no agreement between you and the insurance company.
4. Read the contract, the policy. There may be a provision in your policy that covers the expenses related to addressing your claim as the policyholder and covers the expense of compensating the mediator’s fees.

Pre-Mediation and What to Do:

1. Look for a mediator with experience in litigation or in resolving issues related to insurance policy coverage involving bad faith.
2. Only agree to mediate with someone who has no interest in the final outcome of the mediation.
3. Insist that the representative of the insurance company has signing authority to resolve the dispute regardless of the disputed amount.
4. Make sure to exercise your right to obtain copies of all documents your insurance company has regarding your claim before mediation begins
5. Consult or attend mediation represented by a lawyer, especially if the insurance company attends mediation with a lawyer.
6. Do not have high hopes for mediation and be prepared to leave mediation if there is no agreement. Many disputes are resolved after mediation, meaning that mediation is sometimes the first step toward reaching an agreement in the future.
7. Prepare, prepare, prepare.
8. It is essential to provide a summary to the mediator about your claim before mediation begins. It is advisable to consult with your lawyer to help prepare your summary.
9. Do not feel intimidated. You have paid for coverage and have the right under your policy and the law to fully enjoy that coverage.

Disadvantages of Mediation:

• The insurance company may not be interested in reaching an agreement with the insured but may be interested in using mediation to gather evidence and check the legal validity of their claim.
• The insurance company may send a representative to mediation without sufficient authority to reach an agreement with the insured.
• The mediator may unduly influence the insured to force an agreement.
• The mediator may disclose to the insurance company matters that the insured requested to be kept confidential.
• The mediator may have an economic interest that leads them to keep the insurance company happy. Conduct proper checks by verifying references and mediation experiences of your insurance company.
• The insurance company representative may take advantage of the insured’s inexperience with the mediation process and legal concepts.
• The insured may end up abandoning mediation feeling that it was a waste of time and money.

Advantages of Mediation:

• Mediation is a process that is not expensive, informal, and non-binding. If you do not like the outcome, you do not have to accept it.
• Mediation is an effective procedure for resolving disputes that allows you to move on with your life.
• Mediation is a process that helps both parties become aware of the weakness or strength of their respective positions, therefore helping insureds and insurance companies to be more realistic.
• Quick payment of the agreed-upon money.

Naivys Galvez

Principal Public Adjuster