Arbitrators Must Follow Contract Requirements
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The primary issue in the consolidated appeals is the scope of an automobile insurance policy’s arbitration provision. Two insureds with identical Allstate Insurance Company medical payments and uninsured/underinsured motorist (UIM) insurance coverage settled with their respective at-fault drivers for applicable liability insurance policy limits and then made medical payments and UIM benefits claims to Allstate. Allstate and the insureds were unable to resolve the UIM claims and went to arbitration as the policy required. The arbitration panels initially answered specific questions submitted about the insureds’ accident-related damages. At the insureds’ requests but over Allstate’s objections, the panels later calculated what the panels believed Allstate ultimately owed the insureds under their medical payments and UIM coverages and issued final awards.
In Allstate Insurance Company v. Nathan Harbour, Allstate Insurance Company v. Kenneth N. Mattison, Supreme Court No. S-17307, Supreme Court No. S-17610 (Consolidated), No. 7545, Supreme Court Of The State Of Alaska (July 23, 2021) the Supreme Court was asked to reverse the award of the arbitrators that exceeded their authority
Arbitration usually saves time and money to the parties whose disputes are resolved by arbitration. It works most of the time because the arbitrators asked to resolve insurance issues limit their findings to what the arbitration provision of the policy allows. In this case the Alaska Supreme Court found that the arbitrators exceeded their authority and rendered an award that included findings that only a court could provide.