Glossary
Arbitration
A private process in which a neutral arbitrator hears both sides and decides the dispute. Whether the decision is binding depends on the agreement or the court rules.
General information, not legal advice. Talk to a licensed attorney in your state.
Quick answer
Arbitration is a way to resolve a dispute outside a courtroom. A neutral arbitrator, or a panel, hears both sides and makes a decision called an award. Whether that award is final depends on the agreement or the court rules that sent the case there.
In a car accident claim#
Arbitration usually comes up in two places. The first is insurance. In California, for example, disputes over an uninsured motorist claim are settled by agreement between you and your insurer or, if you disagree, by arbitration, which matters after hit-and-run crashes.
The second is the courts. Some court systems send smaller lawsuits to arbitration before trial. Civil cases in the Philadelphia Court of Common Pleas worth $50,000 or less go to compulsory arbitration, and in Nevada, district court damages cases worth $100,000 or less per plaintiff must first go to nonbinding arbitration. In court programs like these, a party who disagrees with the award can generally appeal or go on to trial. See filing a lawsuit for how a case reaches that point.
Arbitration is not the same as Mediation. A meeting led by a neutral mediator who helps both sides try to reach a settlement. Nothing is decided unless both agree. Glossary. A mediator helps the two sides reach their own deal, as our mediation guide explains; an arbitrator decides for them.
Example#
Related terms#
Questions people ask
Is arbitration binding?
It depends. An award under an arbitration agreement is usually binding, with few ways to challenge it. Many court-run programs for smaller cases are nonbinding: a party who rejects the award can ask for a trial.
What is the difference between arbitration and mediation?
In arbitration, a neutral person hears the evidence and decides the outcome. In mediation, a neutral person helps the parties negotiate, but nothing is decided unless both sides agree.
Sources
- Cornell Law School, Legal Information Institute, Wex: arbitration — general definition
- United States Courts, Glossary of legal terms — arbitration as a form of alternative dispute resolution
- Circuit Court of Cook County, Mandatory Arbitration Program — an example of a court-run program
- California Legislature, Insurance Code § 11580.2(f) — as of October 2026
- First Judicial District of Pennsylvania, Court of Common Pleas Trial Division - Civil — as of October 2026
- Nevada Legislature, NRS 38.250(1)(a) — as of October 2026
Last reviewed October 29, 2026 by the Accident Claim Facts editorial team. Found an error? Tell us.
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