Choice of Law Clauses are design to pick the State law that will control a dispute

The dispute must be between the insured and the insurance carrier

Choice of Law Clause:

The insurance company can decide the state law that will used to solve a dispute with the insured. For example, you could be in Montana and go to arbitration. The arbitrator will be instructed to follow the rules of New York (if that is the state law selected) when solving the dispute.

Forum selection clauses (follow the link at the end of this page) give you the geographical place where the dispute will be heard, choice of law clauses give you the state law that will control the case. If the policy is silent, then the state where the vehicle was intended to reside will be the choice of law.

This clause can be the single most powerful weapon of your insurance company. Be aware of it! You could have your car and policy in New York, have an accident in New York. Live all your life in New York, never left to even visit any where else, and once you have a dipute with the insurance company, then end up using Delaware Laws!

Note that this is a dispute about insurance handling and insurance issues, not the rules of the road where the accident acutally happened (the fault or liability portion).

Most insurance policies do not have this clause in them, but some do. Some states will not enforce a Choice of Law Clause, but again some will. Therefore, you need to be aware of it.

This clause or term could have a significant impact in your dispute. Different states have different limits and laws. Your insurance company will most likely try to make you follow the laws of a state that is most beneficial to them.

An example of this clause is: “all disputes between “Carrier Name” and the insured will be resolved using North Dakota law.”

You must compare and contrast the difference betwee a choice of law and forum selection clauses. They are similar but yet very different. Learn more.