Asked by Lizbeth Longoria on May 04, 2024
Verified
Bjorg applies for a life insurance policy to be issued by Credible Insurance Inc. If a dispute arises between the parties concerning the settlement of a claim, the insurer wants the dispute to be submitted to an impartial third party, not a court, for resolution. Under an arbitration clause, this would be
A) permitted, but not required.
B) required.
C) prohibited.
D) restricted, but not prohibited.
Arbitration Clause
A contract provision that requires parties to settle disputes through arbitration rather than litigation in courts.
Credible Insurance
Insurance coverage provided by a reputable and financially stable company that can be trusted to pay out claims as stipulated by the policy.
Impartial Third Party
A neutral individual or entity not involved in a dispute who may assist or help resolve issues without bias.
- Understand the role of arbitration clauses in insurance policy disputes and how disputes can be resolved without court intervention.
Verified Answer
PA
Proficient AccountantsMay 08, 2024
Final Answer :
B
Explanation :
Arbitration clauses in insurance contracts are common and enforceable. They require disputes to be resolved through arbitration rather than through court litigation, providing a mechanism for dispute resolution that is often faster and less costly.
Learning Objectives
- Understand the role of arbitration clauses in insurance policy disputes and how disputes can be resolved without court intervention.