# Arbitration

> Arbitration is a private process where a neutral arbitrator hears both sides of a dispute and decides it. Here is where it shows up after a car crash.

Canonical page: https://accidentclaimfacts.com/glossary/arbitration/  
Last reviewed: October 29, 2026 by the Accident Claim Facts editorial team  
General information, not legal advice. Talk to a licensed attorney in your state.

## Quick answer

Arbitration is a way to resolve a dispute outside a courtroom. A neutral arbitrator, or a panel, hears both sides and makes a decision called an award. Whether that award is final depends on the agreement or the court rules that sent the case there.

## In a car accident claim

Arbitration usually comes up in two places. The first is insurance. In California, for example, disputes over an uninsured motorist claim are settled by agreement between you and your insurer or, if you disagree, by arbitration, which matters after [hit-and-run crashes](https://accidentclaimfacts.com/accidents/hit-and-run-accidents/).

The second is the courts. Some court systems send smaller lawsuits to arbitration before trial. Civil cases in the Philadelphia Court of Common Pleas worth $50,000 or less go to compulsory arbitration, and in Nevada, district court damages cases worth $100,000 or less per plaintiff must first go to nonbinding arbitration. In court programs like these, a party who disagrees with the award can generally appeal or go on to trial. See [filing a lawsuit](https://accidentclaimfacts.com/claim-process/filing-a-lawsuit/) for how a case reaches that point.

Arbitration is not the same as mediation. A mediator helps the two sides reach their own deal, as our [mediation guide](https://accidentclaimfacts.com/claim-process/mediation/) explains; an arbitrator decides for them.

## Example

> **Example:** A driver hurt by an uninsured driver and the driver's own insurer cannot agree on the value of the uninsured motorist claim. Under the policy and state law, the dispute goes to an arbitrator, who hears evidence from both sides and decides what the insurer owes under that coverage.

## Related terms

- [Mediation](https://accidentclaimfacts.com/glossary/mediation/)
- [Uninsured motorist coverage](https://accidentclaimfacts.com/glossary/uninsured-motorist-coverage/)
- [Settlement](https://accidentclaimfacts.com/glossary/settlement/)

## FAQ

### Is arbitration binding?

It depends. An award under an arbitration agreement is usually binding, with few ways to challenge it. Many court-run programs for smaller cases are nonbinding: a party who rejects the award can ask for a trial.

### What is the difference between arbitration and mediation?

In arbitration, a neutral person hears the evidence and decides the outcome. In mediation, a neutral person helps the parties negotiate, but nothing is decided unless both sides agree.

## Sources

- [Cornell Law School, Legal Information Institute, Wex: arbitration](https://www.law.cornell.edu/wex/arbitration) — general definition
- [United States Courts, Glossary of legal terms](https://www.uscourts.gov/glossary) — arbitration as a form of alternative dispute resolution
- [Circuit Court of Cook County, Mandatory Arbitration Program](https://www.cookcountycourt.org/department/mandatory-arbitration-program) — an example of a court-run program
- [California Legislature, Insurance Code § 11580.2(f)](https://law.justia.com/codes/california/code-ins/division-2/part-3/chapter-1/article-2/section-11580-2/), checked October 29, 2026
- [First Judicial District of Pennsylvania, Court of Common Pleas Trial Division - Civil](https://www.courts.phila.gov/common-pleas/trial/civil), checked October 29, 2026
- [Nevada Legislature, NRS 38.250(1)(a)](https://www.leg.state.nv.us/NRS/NRS-038.html), checked October 29, 2026