Question: Can an insurance company require an insured to go through arbitration instead of having their case filed in a trial court and heard by a jury?
Answer: Yes, if policy allows for arbitration. If the language in an insurance policy is clear and unambiguous, it should be given its plain and ordinary meaning. An ambiguity does not exist simply because a controversy exists between the parties, each favoring an interpretation contrary to the other. Under Indiana law, an insurance policy is ambiguous if reasonable persons may honestly differ as to the meaning of the policy language. Where there is ambiguity, insurance policies are to be construed strictly against the insurer. The insured argue that the word “may” in the policy makes arbitration permissive and not mandatory. They contend that a reasonable interpretation of the policy is that the parties are permitted to submit disagreements to arbitration, but not that arbitration is unequivocally required should either party demand it. Pekin acknowledges that the term “may” is permissive and that, in general, the arbitration provision in the policy is permissive, not mandatory. However, once a demand for arbitration is made, the provision becomes mandatory.
