Alternative dispute resolution (ADR) is a structured way to resolve insurance coverage or payment disputes without a full trial.
Insurance mechanics
ADR can include mediation, arbitration, ombudsman review, or expert valuation processes depending on what the policy or state code requires. It is typically faster than litigation for defined valuation disputes.
Policies may require that specific disputes first enter a contractual ADR pathway before suit, especially in some liability and professional liability contracts.
Claims and adjusting logic
For claims teams, ADR can reduce long-tail defense cost and create predictable schedules for case resolution. For insureds, outcomes can be clearer when expert valuation terms are already embedded in the policy schedule.
Legal framing
Regulators often permit ADR clauses but may enforce minimum standards: fairness notices, access rights, and non-waiver of unwaivable rights.
Practical scenario
Two parties contest the valuation of a business interruption claim. Instead of filing in court, the parties submit records to a neutral valuation panel under a policy ADR clause, agree on replacement cost method, and close within weeks.