Strategies, Challenges, and Answers

Auto Insurance Carriers Cannot Compel Arbitration, But It Never Hurts To Ask

Most auto insurance policies include a provision that allows the insurance company and the insured to arbitrate first party disputes.  However, attempts to compel arbitration under auto insurance contracts are forbidden in Nevada:

NRS 690B.017 provides:
NRS 690B.017  Provisions for arbitration not binding.  No provision for arbitration contained in an automobile liability or motor vehicle liability insurance policy delivered, issued for delivery or renewed in this State is binding upon the named insured or any other person who makes a claim under the policy.
Compel Arbitration, Nevada Coverage Law, Nevada Bad Faith Law, Mills & Associates Nevada Insurance and Coverage Lawyers, Las Vegas Insurance and Coverage Lawyers 702-240-6060 Note that this provision does not forbid arbitration.  It simply prevents carriers from compelling arbitration under the auto policy.  Even so, many first-party auto cases will end up in arbitration anyway under Nevada’s Court-Annexed Arbitration Program for claims of a value of $50,000 or less.  Note however that those court annexed arbitrations are non-binding.
Whether voluntary binding arbitration under the policy is the best solution to resolving the dispute will depend on the facts of the particular claim.  Factors to consider might include the policy limit, the company’s valuation of the claim and the comparative costs of litigation.
Another important factor to consider is the risk of “bad faith” exposure.  If that is a threat, evidence of reasonableness in the claims handling process will be examined by that trier of fact.  While the company cannot force arbitration, the offer of arbitration to an insured can be evidence that supports the argument that the company was trying its best to avoid costly litigation.  If you have questions about arbitration under the policy and whether it is a good option in your case, please email mike@mcmillslaw.com. We will be glad to discuss your claim with you.
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