Is that Arbitration “Demand” Really a Demand?
While arbitration is generally required to determine an insured’s coverage for the liability of an uninsured motorist, the process for effectively commencing arbitration is not always clear. Attorneys have a propensity for sending demand letters; however, as shown by Allstate Ins. Co. v. Gonzalez (1995) 38 Cal.App.4th 783, simply including language demanding arbitration is insufficient to trigger arbitration.
In Allstate, the court addressed the issue of whether the insured’s delay in demanding arbitration constituted a waiver of his right to arbitrate. Three years after the subject accident, the insured’s counsel sent a letter to the carrier’s counsel informing the carrier that the insured was making a claim for uninsured motorist benefits and stated “We would like to proceed with an uninsured motorist arbitration in this matter.” Id. at 791. The carrier’s counsel responded by asking insured’s counsel to file an arbitration demand at the AAA office. The next year, the insured’s new counsel asked the carrier’s counsel to “note that we are filing a demand for arbitration.” Id. at 791. However, a demand was not filed with the AAA office until three years after first letter indicating the insured’s desire to proceed with arbitration.
The Allstate Court determined letters sent by the insured’s counsel were not proper arbitration demands and the carrier’s counsel properly directed the insured’s counsel to file a demand with the AAA. Specifically, the Court noted that the letters did not comply with Insurance Code section 11580.2(f), which requires any demand or petition for arbitration to contain a declaration under penalty of perjury stating (i) whether the insured has a workers’ compensation claim, (ii) whether the claim has proceeded to findings and award and (iii) if the claim has not proceeded to a finding and award, what good cause exists for the arbitration to proceed immediately. The court further noted the burden of prosecution is always with the plaintiff and the insured’s unreasonable delay in demanding arbitration waived his right to arbitration.
Based on the guidance from Allstate Ins. Co. v. Gonzalez, in the instance of a dispute regarding coverage for uninsured motorist insurance benefits, it is the insured’s responsibility to pursue arbitration. A proper arbitration demand must comply with the requirements set forth in Insurance Code section 11580.2(f) and include a declaration under penalty of perjury. Finally, the right to arbitrate is not absolute and the insured’s failure to properly demand arbitration in a timely fashion may result in a waiver of the right to arbitrate.
ABOUT THE AUTHOR: Kate Besch is a graduate of the University of Iowa College of Law. She specializes in general liability defense and business litigation. Contact Kate at 858.263.4115 or email@example.com.
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