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New Jersey Has Chosen Administrator of its Mediation Program Following Hurricane Sandy

Tuesday, April, 2, 2013


After the aftermath of Hurricane Sandy, New Jersey is among other states on the East Coast that have been focusing on mediation as a way to resolve the overwhelming number of claims that have poured in since the disaster struck.  In that focus, the state has chosen The American Arbitration Association to serve as administrator over the program, which will focus on using mediation as an alternative dispute resolution process to resolve disputes over insurance claims after the storm. 

The process of mediation has already been heralded by the surrounding states of New York and Connecticut as the preferred method for dealing with such disputed claims.  New York was the first among the northeastern states that were affected by Hurricane Sandy to pass legislation proposing mediation as a required process for insurance companies involved in the disputes. 

Mediation provides a forum in which insurance policyholders and the companies providing those policies can enter into a low-cost alternative dispute resolution process, facilitated by a neutral, third-party mediator.  In most of the situations, the fees associated with the mediation process must be paid by the insurance company disputing the claim.  Additionally, once a resolution has been reached, the insurance company involved in the mediation process must pay the claim immediately. 

New Jersey’s new mediation program will be open to any policyholder who has a home, auto or commercial claim related to Hurricane Sandy that is still open with an insurance company.  The insurance company must also be a standard company, such as Allstate or State Farm.  Flood-related claims are not included in the mediation program’s current eligibility requirements due to the fact that they are managed by the National Flood Insurance Program.  Also, non-standard insurance companies that provide policies to property that cannot otherwise be insured are not required to participate in the program; however, they may apply and will be considered for inclusion, depending on the specific details of the case.