Which of the following accurately describes arbitration in the context of an insurance dispute?

In the context of an insurance dispute, arbitration is a formal, binding process in which a neutral third party, known as an arbitrator, resolves the conflict based on the evidence presented. This process is often utilized when there are disagreements involving coverage questions or the value of a claim. The binding nature of arbitration means that the decision made by the arbitrator is final and enforceable in a court of law, ensuring that both parties are bound by the outcome without the possibility of appeal in most circumstances.

This contrasts with other methods of dispute resolution, such as mediation, which is typically non-binding and aims to facilitate a mutually agreeable solution without a final determination made by a third party. Similarly, informal discussions of policy terms or non-binding processes would not provide the definitive resolution that arbitration does. Thus, the characterization of arbitration as a binding resolution that can address coverage questions accurately reflects its role in resolving insurance disputes.