Arbitration is about choice. The arbitration provision for uninsured and underinsured motorist (UM/UIM) coverage found within the standard North Carolina personal auto policy[1] provides an insured with a choice:[2] whether or not to demand mandatory binding arbitration. This choice gives them power. When arbitration is an option, it can wield great advantage. As a sword, it can strike and weaken an opponent; as a shield, it can to defend and protect vulnerabilities. This chapter  guides practitioners through arbitration.

In order to put this in perspective, one needs to understand general arbitration  trends in North Carolina.  Insurance companies have been inserting mandatory arbitration provisions into their standard auto policies at an alarmingly increased rate.  Such provisions usually reduce the number of choices an insured can make to resolve insurance disputes. When arbitration is no longer one option among many, but becomes the only option, insureds suffer. Consumers stripped of the right to a jury trial lose not only a remedy—they suffer an erosion of underlying rights.

[1] This is part of what is referred to in North Carolina Rate Bureau [hereinafter NCRB] circulars as the “North Carolina Personal Auto Policy Program.” NCRB is a non-profit, unincorporated rating bureau created by the General Assembly of North Carolina under the provisions of Article 36 of Chapter 58 of the General Statutes of North Carolina on September 1, 1977. NCRB provides services and programs for the insurance industry in North Carolina for automobile, property, and workers’ compensation.

[2] This chapter only discusses the arbitration provisions contained in the standard personal auto policy but similar and in some ways less restrictive arbitration provisions are also contained in business auto policies issued in North Carolina. See, e.g., CA 21 16 (ed. 4-10), p.4.

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