Sometimes, one or more parties who plan to seek mediation have insurance that covers or could cover the claims at issue in the dispute. How does having insurance impact the mediation and potential settlement?
A representative of the insurance company will most likely attend the mediation or be available by telephone. The representative generally must approve of or at least know about all settlement offers made by the party with insurance, and he must approve the ultimate settlement if one is reached. Part of the reason for this is that insurance policies have policy limits, or maximum amounts that the insurance company will pay for the claims at issue. If the party with insurance has other pending claims or recent payouts from its insurance, the policy limit may necessarily be lower. Also, the party making the settlement offer may need to consider how much he can expect the insurance to cover for other pending claims.
Sometimes, both parties may have insurance – for example, if a person is injured at a business place and has health insurance and the business has liability insurance. Each insurer cares about the settlement amount – the health insurer wants medical bills to be paid from the settlement so that the insurance company does not have to pay them, and the liability insurer wants to pay as little as possible to make the claim go away. As you can see, during this type of mediation the merits of the dispute and needs of the parties may fade into the background.
Once the parties start discussing settlement numbers, it may take some time for the party with insurance to respond to an offer because he will need to check with the insurer's representative. Insurance companies resolve claims every day and keep statistics on how much they pay for various types of claims. Their statistics will guide the settlement offers that they approve, which may seem very low at first. Since insurance companies usually have many claims pending at once, even if they pay out a lot of money on one claim, they can try to pay out less on another.
Insurance companies care about how much the case is likely to cost for them if it goes to trial. Attorneys present at the mediation and the mediator care about success at trial too. Chances of success at trial greatly affect how much the parties might agree to settle for at mediation. As in all mediations, a skilled mediator can help the parties and even the insurers reach agreement by discussing the merits of the dispute and the facts in detail.
To find out more about using mediation to resolve disputes, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.