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Michigan auto attorney warning: AAA uninsured motorist coverage arbitration

Watch out, arbitration may mean trial for UM, even after the arb award!

AAA just added a nasty little addition to its policy regarding uninsured motorist coverage and underinsured motorist coverage (UM and UIM) and the right to arbitration. This change is going to surprise a lot of auto attorneys in Michigan next year (and probably cause a lot of very unhappy clients for lawyers unaware of this important policy change).

Here’s the change to AAA’s policy language:

For damages caused by an underinsured motor vehicle:

a. … the decision agreed to in writing by two of the arbitrators will be binding if the amount of damages determined by the arbitrators does not exceed $50,000 for bodily injury to any one person or $100,000 for bodily injury to two or more persons in any one motor vehicle accident. Judgment upon the award rendered by the arbitrators may be entered in the Circuit Court in the county in which the arbitration was held.

b. if the amount exceeds $50,000 for bodily injury to any one person or $100,000 for bodily injury to two or more persons, the decision of the arbitrators will not be binding and either party may demand the right to a trial, unless the parties agree otherwise by prior written agreement. Trial shall be on all issues of the arbitrators’ decision. This demand must be made within 60 days of the arbitrators’ decision and suit filed in the court of proper jurisdiction within 120 days of the arbitrators’ decision. If this demand is not timely made or if suit is not timely filed, the decision of the arbitrators will be binding. Judgment upon any binding award rendered by the arbitrators may be entered in the Circuit Court in the county in which the arbitration was held.

The take away for auto accident attorneys in Michigan, and perhaps other states if AAA has made this change nationwide, is to make sure you agree, in writing, before arbitration that the arbitration decision will be binding no matter what the arbitration award. Make sure the AAA insurance defense lawyer has agreed to this, in writing, or any arbitration award will not be binding, and you just spent a whole day educating the defense attorney and the insurance company on the strengths of your case so they can better prepare for trial.

How arbitration works in Michigan auto accident cases

Not every auto accident case goes to trial (unlike in TV). In fact, the vast majority settle. However, to receive the best possible settlement for pain and suffering if you’ve been injured in an auto accident, I’ve learned that there’s a strong correlation between the more your lawyer prepares for trial and the higher the likelihood that the case will settle, and settle at a higher amount. In other words, having an attorney who is preparing for trial shows the auto insurance company that you’re prepared and serious, and increases the risk and exposure to the insurance company of a high jury verdict.

To avoid trial, many auto accident cases go into arbitration. The benefits of arbitration for auto accident victims are that the hearing is normally over in one day, whereas a full-blown trial can take several weeks. Also, the costs are a fraction of what your attorney will need to spend to take the case to trial. Finally, there is normally never an appeal – the decision of the arbitrators is binding for both sides.

This is why the AAA policy change is going to cause problems for a lot of unsuspecting auto accident attorneys out there, and a lot of unhappy clients when they learn that the arbitration award they just went through was basically meaningless.

Steve Gursten is recognized as one of the nation’s top attorneys handling serious auto accident lawsuits. He writes about insurance company abuse and the No-Fault laws in Michigan, and is available for comment.

Related information:

How much UM and UIM is needed?

Three potential cases for auto accidents in Michigan

Michigan’s 10 worst auto insurance companies

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (800) 777-0028 for a free consultation with one of our auto attorneys.

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