When a disagreement over a claim arises, arbitration is often utilized to resolve the conflict without having to go through the litigation process. Insurance arbitration relies upon an arbitrator (the neutral third party) to make an appropriate decision based on the specifics of a claim or case.Arbitration is a form of alternative dispute resolution often used in place of litigation. Most car insurance policies let you resolve your dispute through an outofcourt process called arbitration. Less formal than a courtroom jury trial. The arbitrator's final decision on the case is called the "award. " This is like a judge's or jury's decision in a court case. Arbitration is the process of using a third party to settle a dispute instead of taking the case to court.