Arbitration of Environmental Insurance Claims: It's Not All Bad News for Policyholders

Most environmental insurance policies contain provisions calling for arbitration of claim disputes. Arbitration generally is confidential; it prevents development of the common law and is geared toward compromise. Standard policy arbitration provisions also are often used to curtail traditional policyholder protections. For these and other reasons, arbitration is generally not favorable to policyholders and should often be avoided. About a dozen states recognize this and bar coverage arbitration. There are other ways to avoid arbitration depending on the circumstances. However, if arbitration ultimately is required, there are several practical ways to make it fairer.