mandatory arbitration provision

A mandatory arbitration provision is a provision in an insurance policy that requires an insured to submit disputes with the insurer (typically as respects the existence of coverage) to arbitration rather than to the traditional judicial system.

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Arbitration can be advantageous for insureds because it normally expedites the dispute resolution process—on a lower cost basis—compared with court systems. However, arbitration is generally even more beneficial for an insurer, because arbitrators, compared to juries, may be less apt to award large verdicts based on emotional issues.