Property Subrogation Arbitration

The property subrogation arbitration agreement is designed to settle any questions or disputes, among insurers bound by this agreement, involving the following:

1.Any fire or property damage subrogation claim not in excess of $100,000;

2.Any first party property subrogation claim not in excess of $100,000 and not within the compulsory provisions of other industry inter-company arbitration agreements.

3.Any extended coverage subrogation or self-insured additional extended coverage claim not in excess of $100,000.

4.Any additional extended coverage subrogation or self-insured additional extended coverage claim not in excess of $100,000.

5.Any inland marine subrogation or self-insured inland marine claim not in excess of $100,000.

A claim arising out of any of the following rules is not eligible for this arbitration agreement: The International Rules of the Road, the United States Inland Rules of the Road, the Great Lakes Rules of the Road, and the Western Rivers Rules of the Road, provided the accident occurs on a body of water within the geographic limits of one state.

Also not subject to this arbitration agreement are any subrogation claims for the enforcement of any pending lawsuits or those that were instituted prior to the time this agreement was signed; those claims that an insurer asserts as a defense because of lack of coverage on grounds other than for delayed notice, no notice, or noncooperation; or those claims arising from policies written under retrospective rating plans unless prior written consent from the companies involved is obtained.

All other controversies—other than those previously mentioned as being eligible for arbitration under this program—such as those involving policy coverage interpretations or claims for amounts exceeding $100,000 may also be submitted to arbitration under this agreement. The only requirement is that parties have prior written consent to arbitrate such disputes.

Examples

The following are examples of actual cases submitted for handling under property subrogation arbitration. They are reproduced with permission from Arbitration Forums, Inc.

1.A dispute arose between an insurer of the contents of an apartment and the insurer of a restaurant, which caught fire. The fire spread from the restaurant to the apartment, and a coverage dispute occurred.

2.While performing repairs at a business, an independent contractor's oil tank exploded. The insurance companies involved turned to property subrogation arbitration to determine the liability for damages.

3.Another dispute arose between the insurer of a boat, which broke loose from its trailer while being lowered into the water, and the insurer of the dock, which was damaged by the boat.

4.Two automobiles struck a building after colliding with one another. A dispute arose between the building's insurer and the insurers of the two vehicles.

International Reciprocal Agreement

This forum was introduced more than twenty-five years ago as a bridge program between AF's automobile subrogation forum and the Canadian Insurance Claim Managers' Association (CICMA) automobile program.

It was designed to facilitate the recovery of claim dollars when accidents or losses involve insureds from both the United States and Canada. Claims arising from accidents within the United States are filed under AF's automobile subrogation forum. Claims arising from accidents in Canada are filed with the CICMA program. The applicable jurisdictional case laws apply.

Rules and regulations of the AF's other programs also apply.

Personal Injury Protection (No-Fault) Arbitration Agreement

Arbitration Forums initially implemented the automobile accident reparations arbitration agreement to meet the arbitration requirements of the Illinois and Delaware automobile accident reparations statutes. However, the agreement serves as a model for the industry whenever similar legislation provides subrogation rights and the pursuit of them through arbitration. It is designed to settle disputes arising from no-fault coverage between insurers, self-insureds, and commercial insureds with large retentions after payment has been made.

The compulsory jurisdiction of agreements, monetary limits, and extent of claims is governed by the statute creating the subrogation rights. If there is no such statute, the compulsory jurisdiction is determined by the terms and provisions of a voluntary personal injury protection endorsement that provides subrogation rights. Whether an insurer is legally entitled to recover from another insurer is the decision of the arbitration panel. The PIP agreement is entered into on a state-by-state basis, with some states mandating using AF to resolve subrogation claims.

Any insurer that has consented to abide by this agreement can later withdraw by giving the usual written notice with the effective date being sixty days thereafter, except when pending cases are involved. In that situation, withdrawal is effective upon final settlement of the case(s).

Insurers or self-insureds who have signed the PIP agreement must submit disputes to arbitration if:

1.The dispute arises from the pursuit of direct action recovery rights or loss transfer that were created through claim or benefit payments under a state automobile no-fault law,

2.The amount in dispute is within the limits established under the law of the state in which the dispute arises,

3.The parties to the dispute are insurers or qualified self-insurers under the state's no-fault law, and

4.The dispute does not involve a claim for recovery rights in which an insurer has asserted a defense of lack of coverage other than delayed notice, no notice, or noncooperation.

Uninsured Motorists Arbitration

Uninsured motorists arbitration is the forum through which carriers bind themselves to arbitrate coverage questions under automobile liability policies where a disclaimer results in a claim against another signatory company under its uninsured motorists coverage. The program currently is offered only in New York and Maryland.

If a case is settled prior to arbitration and the arbitration panel does not uphold an insurer's declination of coverage, that insurer is obligated to reimburse the other insurer involved in the dispute for the amount of settlement. If a suit subsequently arises between parties not bound by this agreement and a court should decide that the insurer's declination of coverage was proper, it is the obligation of the other insurer to return the reimbursement to the disclaiming insurer.

No suit or claim is subject to arbitration under this agreement when a policy is written on a retrospective or experience rating basis or when any payment that an insurer is required to make is or may be in excess of its policy limit.

Disputes arise when a participating company denies coverage to a claimant, who then turns to his/her own carrier for recovery under uninsured motorists coverage. The UM insurer may settle with its insured but then file for arbitration of the original carrier's denial.

Examples

The following examples of uninsured motorists arbitration are reproduced with permission from Arbitration Forums, Inc.

1.A claimant was injured while riding as a passenger in a friend's automobile. The carrier for the vehicle denied coverage on grounds of nonpayment of premium. The claimant then presented a UM claim to his own carrier who settled with him. The claimant's carrier (company 1) then filed an uninsured motorists arbitration against the friend's carrier (company 2) challenging the validity of the disclaimer. If Company 1 is victorious, they are entitled to a reimbursement of their tort payment from Company 2.

2.A pedestrian who had his own car insurance was struck by a vehicle that was backing up. The carrier for the striking vehicle denied coverage to its insured owner-operator based on delayed notice and noncooperation. The pedestrian submitted his claim to his own carrier who settled with him. The pedestrian's carrier (company 1) files an uninsured motorists arbitration to attack the basis for the disclaimer of company 2. If successful, they can demand reimbursement for their tort payment.

Medical Payment Subrogation Arbitration

This forum resolves disputes arising from subrogation of medical payments coverage between insurance companies only. Insureds of companies that have signed the agreement who dispute values or coverage decisions cannot be parties to the arbitration.

The medical payment subrogation arbitration agreement is applicable to accidents, insured events, or losses that occur within the limits of the United States, Puerto Rico, and the U.S. Virgin Islands. It is not applicable to other U.S. possessions and territories, nor to foreign countries, unless there is agreement among the parties to extend the territory.

Compulsory arbitration is limited to claims of $100,000 or less.

This arbitration agreement does not apply to:

1.Subrogation claims within the exclusive jurisdiction of states in which medical payment subrogation claims are prohibited by law or judicial decision.

2.Subrogation claims in which a lawsuit was instituted prior to, and is pending, at the time the agreement was signed.

3.Subrogation claims in which a company asserts a lack of coverage defense on grounds other than delayed notice, no notice, or noncooperation.

4.Subrogation claims involving liability coverage written under retrospective rating plans unless prior written consent is given.