Insurance policyholders beware – possible changes to insurance provisions could cost Texans their legal rights. That’s right, the already complex, often frustrating world of insurance may be changing in a way that hurts Texans, rather than helps them. Read on to learn more about the proposed changes, your rights, and what you can do to protect yourself.
Farm Bureau Pushing for Mandatory Arbitration
The Texas Department of Insurance is currently considering a proposal made by the largest Texas-based insurer, Farm Bureau, that would give policyholders a discount on their premiums if they agree to settle any future disputes via arbitration, rather than taking the matter to court. This mandatory arbitration clause would essentially take away a policyholder’s ability to file a lawsuit against an insurance company if a dispute arises.
With Farm Bureau being such an influential insurer in Texas, and now the matter being considered by the Texas Department of Insurance, there is a great deal of concern that more insurance companies will follow the example and attempt to incorporate mandatory arbitration clauses in their policy contracts.
What is Mandatory Arbitration?
Mandatory arbitration clauses like the one proposed by the Farm Bureau have specific guidelines for managing disputes. These guidelines may include the following:
- Appraisal – Each party (side) involved in the dispute has the opportunity to hire an appraiser to assess damages and the claim. If the appraisers do not agree on the outcome, an “umpire” will be selected to resolve the matter. If the parties cannot agree on an umpire, then the policyholder will choose an umpire from two firms specified in the arbitration clause.
- Mediation/Arbitration – Mediation is the process that occurs after the initial appraisal when both parties have the opportunity to present evidence and attempt to resolve the dispute in an amicable manner. Unfortunately, mediators or arbitrators are generally selected by the insurance company, which makes bias a serious concern.
In most contracts, if mediation or arbitration fails, the case will move to trial and will be settled before a judge and jury. Unfortunately, with mandatory arbitration clauses, policyholders may be forced to settle for a resolution that is not adequate to compensate them for their injuries and losses.
The Mandatory Arbitration Controversy
Mandatory arbitration is a controversial legal matter. Many states have weighed in on the matter of mandatory arbitration, with 16 states having laws or guidelines prohibiting enforcement of such clauses. Texas is among 24 states that have no statutes or regulations restricting or prohibiting arbitration in insurance disputes.
Understanding Your Policy and Your Rights
Dealing with insurance companies is rarely an enjoyable experience, especially when you are recovering from an accident, injuries, or illness. Do not let the fine print in your insurance contract overwhelm you. Contact Daic Law today to learn more about Texas insurance law, your legal rights as a policyholder, and what you can do to be certain that you have a voice when disputes arise. Call our office today at (713) 808-5246 or send us an email at firstname.lastname@example.org to schedule your free case evaluation.