How To Mediate Away An Insurance Claim

  • August 17, 2022
  • 4 min read

Hello everyone, this is Dave, and today we’re delving into another compelling case that highlights the power of mediation in resolving complex issues. This particular case revolves around a vehicle damage incident, insurance coverage complications, and the delicate interplay of responsibilities among the involved parties.

The Scenario Unveiled

Picture this: a company with a fleet of vehicles covered under a commercial lines insurance policy, akin to standard automotive coverage. This company operated under the protective umbrella of a local insurance agency for about five years, ensuring full coverage for its vehicles used in day-to-day business operations.

However, a lapse in premium payments became the linchpin of a series of events that led to a collision involving one of the insured vehicles. Subsequently, a claim exceeding $200,000 emerged, covering damages to both vehicles and significant injuries to individuals.

Policy Cancellation and Legal Quandary

The plot thickened when the insurance company decided to cancel the policy due to the business’s failure to pay the renewal premium. This decision came after sending the company a notice about the overdue payment. When the collision occurred, the insured company filed a claim, only to be met with a stern response: no coverage due to the canceled policy.

Facing potential litigation, the insured company took an unconventional route. Instead of solely suing the insurance company, they also brought the insurance agent or broker into the legal fray. Why? The company argued that they had received courtesy calls in previous years reminding them to pay their premium, and the absence of such a call this time constituted negligence on the part of the agent.

Mediation as a Resolution Avenue

Enter mediation, a crucial tool in settling disputes outside the courtroom. The insurance company, equipped with Errors and Omissions (E&O) insurance to cover professional mistakes, saw the potential benefits of mediation. The impending uncertainty of a court trial, with unpredictable outcomes and escalating legal costs, prompted a move toward resolution.

Mediation Unveils Common Ground

During the mediation process, all parties involved—the insurance company, the E&O insurance carrier, the insurance broker, and the injured parties—engaged in discussions facilitated by the mediator (us). The aim was not to coerce one party into submission but to find common ground, a resolution that could mitigate losses for everyone involved.

Discovering the True Objectives

As conversations unfolded, it became apparent that everyone shared a common goal: to avoid catastrophic losses, both financially and in terms of reputation. The injured parties sought fair compensation for their losses, while the insurance broker and company wanted to limit their financial exposure.

Balancing the Scales

The mediation process revealed a balanced solution. The out-of-pocket losses for the injured parties, totaling around $75,000, were divided between the insurance broker and the insurance company. This cooperative financial contribution spared all parties involved from the uncertainties and potential losses associated with a court trial.

Lessons Learned and Future Vigilance

The company that lost their vehicle faced a $12,000 loss but acknowledged the valuable lesson learned: vigilance in keeping up with premium payments is paramount. The insurance broker, in turn, gained insights into refining industry best practices, avoiding unnecessary courtesy calls that might set problematic precedents.

The Mediator’s Role: Facilitating Resolution

In the end, the mediation process showcased the power of an impartial mediator in guiding parties toward a resolution that aligns with their underlying objectives. It’s not about creating solutions but unveiling the ones that already exist and making them visible to all parties involved.

A Win-Win-Win Outcome

This case exemplifies the essence of mediation—a collaborative approach that turns potential adversaries into collaborators seeking a common, mutually beneficial resolution. Each party came out of the process with their losses minimized, emphasizing the effectiveness of mediation in resolving complex insurance disputes.

For more insights into mediation and conflict resolution, visit our website at TeleMediator.com. We’re here to assist you in navigating legal complexities and finding amicable solutions.

Navigating Complexities,
Dave
TeleMediator.com

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