Rowan University graduate and NJ resident Anthony Ruggeri completed both the associate in claims (AIC) and associate in risk management (ARM) courses at the Insurance Institute of America. Since then, Anthony Ruggeri of NJ has been working in the insurance industry as a claims adjuster and supervisor. As the claims program manager/supervisor at Armour Insurance Group, he tracks insurance claim arbitrations, mediations, and trials.
Arbitration and mediation are two types of alternative dispute resolution (ADR) that help parties resolve insurance claims outside of court. Since both resolution methods are similar, many people use them interchangeably, but mediation and arbitration are actually two separate legal processes.
The more formal option of the two, arbitration is legally binding and usually occurs instead of court action. Before arbitration can occur, particularly in the United States, both parties must agree to the process. This is done either when both parties enter into a contract that specifically notes that arbitration is the only course of action in event of a dispute, or when they both agree to resolve an existing dispute via arbitration.
Like arbitration, mediation is voluntary and often requires that both parties agree to be involved in the process. However, it is not legally binding and is sometimes required before a regular court case. When mediation is done, a neutral individual creates a dialogue between the parties involved in a dispute and attempts to find a solution they can both agree on. Mediators do not impose a resolution on the parties like an arbitrator does.
Mediation and arbitration also differ in terms of privacy awarded to the involved parties. Since mediation is less binding, all mediation processes are confidential. Assuming the parties do not find an agreeable solution to their dispute and still end up in court, the results of mediation cannot be brought up in favor of either side. Conversely, the results of arbitration are made public and are generally enforceable under both federal and state law in the United States.
