When is arbitration typically preferred over mediation in claims adjustments?

Arbitration is typically preferred over mediation when parties require a legally enforceable outcome because arbitration results in a binding decision made by the arbitrator. In this context, the parties present their case, and the arbitrator makes a ruling that both sides are generally obligated to follow. This enforceability is important in situations where a clear resolution is necessary, ensuring that the decision reached can be upheld in a court of law if necessary.

In contrast, mediation is a more collaborative process and does not result in a binding decision, which can leave parties with unresolved issues or no formal closure. Mediation is typically used when parties prefer to reach a mutual agreement and maintain control over the outcome rather than having a third-party make a binding determination on the issues. Therefore, arbitration is the appropriate choice when a legally enforceable resolution is sought.