1. Forms
2. PR
3. PR-24-01

What the form is

The PR 24 01 Non-Binding Arbitration endorsement is an Insurance Services Office (ISO) form used in professional liability insurance policies. Its primary purpose is to provide a mechanism for resolving disputes between the insurer and the insured concerning whether a particular claim is covered under the policy. If a disagreement arises, this endorsement allows both parties to submit the issue to an arbitrator or an arbitration panel. Importantly, the arbitration is 'non-binding', which means that the arbitrator's decision is advisory rather than final. Either the insurer or the insured can choose to reject the arbitrator's findings and proceed with other dispute resolution methods, such as litigation.

Classes of business it applies to

This endorsement is typically used with professional liability coverage forms, particularly those for health care providers. Examples of where this form might be used include:

• A dispute between a hospital and its insurer over whether a specific malpractice claim falls within the scope of the hospital's professional liability policy.
• A disagreement between a physician and their insurer regarding the applicability of a policy exclusion to a claim made against the physician.

Special considerations

Key considerations for the PR 24 01 endorsement include:

• Non-Binding Nature: The most critical aspect is that the arbitration outcome is not legally binding on either party. This means it can serve as a formal step in negotiation but may not be the final resolution, potentially leading to further legal expenses if one party rejects the outcome.
• State-Specific Availability: The availability and specific wording of this endorsement can vary by state. For instance, this endorsement was noted as approved for use in California with a 09 08 edition date. Conversely, it has been withdrawn in some states, such as Louisiana. Therefore, it's crucial to verify its applicability in the relevant jurisdiction.
• Triggering Arbitration: The endorsement will typically outline the conditions and procedures for initiating the arbitration process.

Key information for agents and underwriters

Agents and underwriters should consider the following:

• Alternative Dispute Resolution (ADR) Tool: This endorsement offers a less formal and potentially quicker ADR method compared to litigation, which can be appealing to some insureds.
• Potential for Continued Disputes: Due to its non-binding nature, there's a possibility that the dispute will continue even after arbitration, potentially leading to litigation costs that the arbitration was intended to avoid. This should be clearly communicated to the insured.
• Underwriting Implications: While the endorsement itself might not have significant pricing implications, its inclusion could reflect the insurer's or insured's preference for a multi-step dispute resolution process. Underwriters should be aware of any state-specific mandates or prohibitions regarding arbitration endorsements.
• Coverage Interpretation: Disputes requiring arbitration often revolve around complex coverage interpretations. A clear understanding of the policy language and the specifics of the claim is essential before proceeding to arbitration.