What a demand for arbitration is and when you need one

A demand for arbitration is a formal written request asking an insurance company to submit your uninsured motorist (UM) claim to a neutral third party for a binding decision. You send it when you and your insurer disagree on how much your claim is worth—typically because they offered far less than you believe the injury or damage deserves. Unlike a lawsuit, arbitration happens outside court, usually faster and with less formality, but the arbitrator's decision is final and enforceable.

Your insurance policy almost certainly includes an arbitration clause that requires both you and the insurer to use arbitration if you cannot agree on the claim's value. This clause exists in most UM policies because it keeps disputes out of court. Once you send a demand for arbitration, you are triggering that contractual process. The insurer must either agree to arbitrate or risk losing the right to dispute the amount you recover.

You typically reach this point after the insurer has made a settlement offer you rejected, or after months of back-and-forth over medical bills, lost wages, or pain and suffering. A demand for arbitration signals that negotiation is over and you are ready to let someone else decide.

Key Takeaways

  • A demand for arbitration is a written notice that forces your insurance company to either accept binding arbitration or lose its right to dispute the amount of your UM claim.
  • Your policy almost certainly includes an arbitration clause that requires this process if you and the insurer cannot agree on what the claim is worth.
  • The demand must include your claim number, a clear statement that you are invoking arbitration, the amount you are demanding, and a brief summary of why you believe that amount is fair.
  • Send the demand by certified mail with return receipt to the address listed in your policy documents, and keep copies of everything for your records.
  • After you send the demand, the insurer has a set time (usually 30 to 60 days, depending on your state and policy) to agree to arbitration or make a final settlement offer.

Finding the arbitration clause in your policy

Before you write anything, locate your actual policy document and find the arbitration clause. It is usually in a section titled "Uninsured Motorist Coverage" or "Dispute Resolution." The clause will spell out the exact process your state and insurer require—including whether arbitration is mandatory, who pays for it, and what happens if one side refuses.

Some policies state that arbitration is binding on both parties; others say it is non-binding, meaning either side can reject the arbitrator's decision and file a lawsuit instead. Read this carefully. A non-binding arbitration clause gives you less leverage, because the insurer can straightforward ignore an unfavorable decision. A binding clause means the insurer must accept the outcome, which is why they take the demand more seriously.

If you cannot find your policy online, call your insurer's customer service line and ask them to email or mail you a copy. Tell them you need the full policy document, not just a summary. Write down the date you requested it and the name of the person who helped you—this creates a record if the insurer later claims they never received your demand.

What to include in your written demand

Your demand for arbitration does not need to be long or use legal language, but it must be clear and include specific information. Start with your policy number and claim number at the top, followed by the date. Address it to the claims department at the address listed in your policy documents.

The body should state, plainly: "I am invoking the arbitration clause in my uninsured motorist coverage and demand binding arbitration of my claim." Then state the exact dollar amount you are demanding. This is the amount you believe your claim is worth—not necessarily what you asked for in earlier negotiations, but the number you would accept from an arbitrator.

Follow that with a brief explanation of why you believe that amount is fair. You do not need to write a legal argument; instead, list the key facts: the date of the accident, the nature of your injuries or damage, the medical treatment you received, any lost wages, and the insurer's last offer. For example: "I was injured in a rear-end collision on March 15, 2023. I received emergency room treatment and six weeks of physical therapy, totaling $8,400 in medical bills. I lost two weeks of work at $1,200 per week. The insurer offered $6,000; I am demanding $12,500 to account for ongoing pain and lost earning capacity."

Close with a statement that you are prepared to proceed to arbitration and request confirmation that the insurer agrees. Keep the tone professional and factual—do not include anger, insults, or threats, which can undermine your position.

How to send your demand and what to keep

Send your demand by certified mail with return receipt requested. This creates proof that the insurer received it on a specific date, which matters because most policies set a important date for the insurer to respond. Do not email it unless your policy specifically allows email service, and do not rely on a phone call or in-person delivery—the insurer needs a paper trail too, and certified mail protects both of you.

Address it to the claims department at the address listed in your policy documents. If you have been working with a specific claims adjuster, you can address it to them by name, but also include the general claims department address as a backup. Make a copy of everything before you mail it: the demand letter itself, any supporting documents you include, and the certified mail receipt once it arrives.

Keep all of these in a folder with your policy, your claim file, medical records, pay stubs, and any prior correspondence with the insurer. You will need these if arbitration actually proceeds, and they prove you followed the process correctly if any dispute arises later about whether the demand was ever sent or received.

What happens after you send the demand

Once the insurer receives your demand, they have a set window to respond—usually 30 to 60 days, depending on your state and policy language. During this time, they will either agree to arbitration, make a final settlement offer, or request more information about your claim.

If they agree to arbitration, the next step is selecting an arbitrator. Most policies require the insurer and you to each pick one arbitrator, and those two pick a third. Some policies use a single arbitrator instead. The arbitrator will set a hearing date, usually within 60 to 90 days, and both sides will present evidence and arguments about what the claim is worth.

If the insurer makes a final settlement offer instead, you have the choice to accept it or proceed to arbitration. Many insurers use this moment to increase their offer slightly, hoping to avoid the cost and uncertainty of arbitration. Whether to accept depends on how confident you are in your case and how much the new offer differs from your demand.

If the insurer ignores your demand or refuses to arbitrate without a valid reason, you may have grounds to file a lawsuit or file a complaint with your state's insurance commissioner. The arbitration clause in your policy is a contract, and the insurer cannot straightforward refuse to honor it.

Common mistakes to avoid

Do not send your demand until you are truly ready to go to arbitration. Once you invoke the clause, you are signaling that negotiation is finished. If you send a demand and then accept a lower settlement offer a week later, it looks like you were bluffing, and the insurer will be less likely to take you seriously in future disputes.

Do not include documents you have not already shared with the insurer. If you are sending medical records or repair estimates for the first time in your demand letter, the insurer will argue that you are hiding information and may delay their response while they review it. By the time you send the demand, the insurer should already know everything about your claim.

Do not overstate your damages or include speculative costs. If you claim $15,000 in pain and suffering but have only $5,000 in medical bills and no lost wages, an arbitrator will likely award you less than if you had demanded $8,000 and backed it up with solid reasoning. Arbitrators look for proportionality between the injury and the amount demanded.

Do not miss the important date to send the demand if your policy includes one. Some policies require you to demand arbitration within a certain number of days after the insurer makes their final offer. If you miss that window, you may lose the right to arbitration and be stuck with the insurer's offer or forced to file a lawsuit instead.

When to consider hiring a lawyer before sending the demand

If your claim is worth more than a few thousand dollars, or if your injuries are serious or ongoing, consider having a personal injury attorney review your demand letter before you send it. An attorney can tell you whether your demanded amount is realistic for your injuries, whether your policy's arbitration clause is favorable to you, and whether the insurer's offer was genuinely low or actually reasonable.

You do not need a lawyer to write or send the demand yourself—it is a straightforward process. But a lawyer's input on strategy can be valuable. Some attorneys will review a demand letter for a flat fee of $200 to $500, which is much less than hiring them to handle the entire claim. If the insurer later refuses to arbitrate or the arbitration process becomes contentious, you can still hire a lawyer at that point.

Frequently Asked Questions

What if my insurance policy does not mention arbitration?

Most UM policies include an arbitration clause, but if yours does not, you cannot demand arbitration. Instead, you would need to either accept the insurer's settlement offer or file a lawsuit in small claims court (if the amount is small) or civil court. Check your policy carefully, or call your insurer and ask whether an arbitration clause exists.

Can the insurer refuse to arbitrate after I send the demand?

Not legally, if your policy includes a binding arbitration clause. If they refuse without a valid reason—such as you missing a important date or failing to provide required information—you can file a complaint with your state's insurance commissioner or pursue a lawsuit to enforce the arbitration clause. Most insurers comply because the cost of fighting it exceeds the cost of arbitration.

How much does arbitration cost?

Most UM policies state that the insurer pays the arbitrator's fees, so it costs you nothing out of pocket. Some policies split the cost or require you to pay your own attorney's fees. Check your policy language before you send the demand so you know what to expect. If the policy is unclear, ask the insurer in writing before you demand arbitration.

What if I change my mind after sending the demand?

You can withdraw the demand in writing at any time before the arbitration hearing begins, and you and the insurer can settle the claim instead. However, once an arbitrator is selected and a hearing date is set, withdrawing becomes more complicated and may require the insurer's consent. It is better to be certain before you send the demand.

How long does arbitration usually take from demand to decision?

From the time you send the demand to the arbitrator's final decision typically takes three to six months. The insurer has 30 to 60 days to respond, then another 30 to 60 days to select an arbitrator, and then the hearing is scheduled. The arbitrator usually issues a decision within 30 days of the hearing. This is faster than a lawsuit, which can take a year or more.