Texas All Lines Adjuster Practice Test

Which of the following statements about arbitration is correct?

1. It requires a jury to decide the outcome

2. It is a formal court hearing

3. It involves a neutral third-party decision-maker

4. It can be contested in a higher court

The correct answer is: It involves a neutral third-party decision-maker

Arbitration is a form of alternative dispute resolution that typically involves a neutral third-party decision-maker called an arbitrator. This individual is selected by the parties involved and is responsible for hearing the evidence and making a binding decision on the matter. Unlike a jury trial, which relies on a group of peers to reach a verdict, or a formal court hearing that is governed by strict legal protocols, arbitration is generally more flexible and can be less formal. This process allows parties to resolve disputes without going through the traditional court system, making it an appealing option for many individuals and businesses seeking to save time and costs associated with litigation. Thus, the statement that arbitration involves a neutral third-party decision-maker is accurate and highlights a fundamental characteristic of this dispute resolution method.