• Blog >
  • Pros and Cons of Mediating an Insurance Coverage Dispute
Stockton Insurance Coverage Dispute Mediation

Pros and Cons of Mediating an Insurance Coverage Dispute

Even though an insurer and a policyholder are on the same side when a third party sues, the relationship can often become adversarial. Policyholders want full compensation payouts on their claims while insurance companies have a vested interest in paying out as little as possible. When the insurer and the insured cannot come to an agreement on claim coverage, one way of resolving the situation is through mediation.

Mediation is negotiation guided by a neutral party called the mediator. The mediator’s role is to facilitate communication and to help the parties reach an amicable solution without going to court. Mediation is non-binding. That is, no party is required to accept a mediated settlement.

There are several advantages to insurance claim mediation, including:

  • Speed — Mediation is much less time consuming than litigation. Going to court can take months or years, whereas mediation usually can be completed within weeks.
  • Cost savings — Mediation is cheaper than litigation. Litigation drives up attorneys’ fees and other expenses and may produce a result that isn’t worth the costs expended.
  • Reality check —An experienced and skilled mediator will have a pretty good idea as to the value of a particular claim. A neutral expert opinion might make an obstinate party more willing to compromise.

Mediation may not produce the best result in all cases. Here are some possible reasons that things may go wrong, especially for the insured party:

  • The insurer is not serious — Insurance companies sometimes do not take mediations seriously. Some insurers go into the mediation with no intention of good faith negotiations, hoping to wear down the policyholder into accepting a low offer.
  • The mediator is biased — Insurers usually insist on using a mediator who has experience in the industry. Such mediators have a financial interest in getting a steady stream of work, which can give them incentive to keep the insurer happy. Any mediation is inherently compromised when the mediator favors one party.
  • There is no return on cost investment — Despite mediators’ best efforts, negotiations do fail. If there is no deal, the parties are back to some other form of dispute resolution. In such cases, the mediation effort was not worth the cost in fees and time expended.

However, even unsuccessful mediations can be beneficial. The parties often re-evaluate their respective positions after failed mediation sessions and this can ultimately lead to a settlement without resorting to litigation.

Our firm’s experienced insurance dispute attorneys often serve as party neutrals in mediations. In addition, our lawyers represent either insurance companies or policyholders in mediation, helping them carry out successful negotiations.

At Quinn & Kronlund LLP in Stockton, our attorneys are dedicated to settling insurance coverage disputes quickly. If you are in need of an unbiased insurance mediator or of representation in a mediation, feel free to contact us online or call 877-943-3955 for an initial consultation.