NJ and NY Mediation Programs Created to Expedite Sandy Insurance Disputes

New Jersey Gov. Christie has announced that his administration is working on a plan to create a new mediation process that would provide consumers with an option to settle their insurance disputes without resorting to time-consuming and expensive litigation. Christie said the mediation program would allow property owners to submit homeowner’s, automobile and commercial property claims to an assigned mediator who will subsequently review cases and assist in settlement negotiations.

The mediation program will be available for disputed non-flood Sandy-related claims above $1,000. Claims must also be based on policies that were in effect at the time Sandy made landfall. According to the proposal, insurance carriers will pay for the cost of the mediator. New Jersey’s mediation plan does not yet include flood insurance claims, which are handled by the National Flood Insurance Program (NFIP) pursuant to federal regulations.

Insurers are required to notify insureds with unresolved claims that they can request instructions on filing for a mediation conference. Surplus lines insurers and risk retention groups may choose to enter the mediation process on a case-by-case basis.

In New York, Gov. Andrew Cuomo announced a similar program. Under a new insurance regulation, homeowners may seek mediation with their insurer for disputed or denied claims. The American Arbitration Association will administer the mediation program.

The program will handle all disputed real and personal property claims, other than those regarding motor vehicle damages, arising between Oct. 26, 2012 and Nov. 15, 2012, in Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk or Westchester counties. Claims made under the NFIP are not eligible for mediation.

Similar to the New Jersey program, New York insurers are required to notify insureds of their right to mediate eligible claims. Insurers will pay for the American Arbitration Association’s mediation costs. Regulators have stated that the mediation is non-binding.