Last week, the Government announced a plan to change the rules on claims for whiplash injuries. The proposals include:
Significantly reducing the value of damages awarded for whiplash injuries;
Increasing the small claims limit for personal injury claims from £1,000.00 to £5,000.00;
Making it compulsory for claimants to have an independent medical report before settlement can be agreed.
The Justice Secretary, Liz Truss, has stated that the Government is trying to stop the “rampant compensation culture…driving up costs for millions of law abiding motorists for minor, exaggerated or fraudulent claims”. It is suggested that by introducing these proposals, motorists will save £40.00 per year on their insurance premiums.
The Law Society has vocally opposed the proposals, which it says prevent innocent victims of accidents from obtaining reasonable compensation for their injuries, and obstruct people’s access to justice.
What is the practical effect of the proposed changes?
The effect of these proposals will be significant to claimants. Most Personal Injury claims are dealt with under “no win no fee” agreements. Under these agreements, claimants avoid paying the majority of their legal costs because solicitors recover their fees from the Insurer. If they can no longer do this in lower value cases, unless solicitors begin working for free, the legal costs will be the claimant’s responsibility.
Imagine you have a simple claim for whiplash where your injuries last for six months:
Under the current rules, you would receive approximately £1,500.00 for your injuries. Your solicitor would then recover around £500.00 of their costs from the insurer. So, the insurer pays around £2,000.00.
Under the proposed rules, you would receive approximately £425.00 for your injuries, and the solicitors will not be permitted to recover £500.00 costs from the insurer. So, the insurer pays around £425.00 (a saving of £1,575.00!).
Therefore, a whiplash claim may end up costing you money, not compensating you for your injuries. At the same time, the insurer saves more than £1,500.00 per claim. Suddenly the £40.00 saving on your motor premium does not seem as generous!
It’s not all bad news
John James, senior associate in our Personal Injury department, welcomes the proposal to make it compulsory to obtain medical evidence before a claim can be settled.
“We can only truly value personal injury claims once we have obtained a medical report from an independent expert. This proposal will ensure that injuries are assessed by a medical professional, rather than an insurance claims handler who is far more likely to undervalue the claim and seek to settle, before a Claimant understands the full extent of their injuries”.
Rumours of these proposals have been circulating for a few years now. Until the proposals are formally enacted into an Act of Parliament, claims will continue to be handled under the current rules.
If you would like to discuss a whiplash claim, contact our specialist Personal Injury solicitors on 01924 692125 for a free initial consultation.