Changes to Whiplash Compensation
Posted on 8th January 2021 at 19:01
If you have suffered a whiplash type injury and you require legal advice and assistance you would be well advised to bring your claim as soon as possible. Although not well publicised the government is changing the law next year so that if the value of your injury claim caused in a road accident is less than £5,000.00 it will be a “small claim.”
Q. What is a small claim?
In cases that fall within the small claims track you are not be able to claim your legal costs from the defendant’s insurance company.
Q. How will that affect my claim?
At present the small claims limit is £1,000.00. However as over 90% of whiplash claims are under £5,000.00 the new laws coming into effect next year will catch most whiplash claims which means that victims will be responsible for their own legal costs even though the accident was not their fault.
Q. Why is the law being changed?
The insurance industry is very powerful and has been lobbying the government consistently for many years to drive down the number of claims for whiplash. Some of the media hype has been:
England is the Whiplash capital of the world - If you were to believe everything you read in the papers about the so-called ‘compensation culture’ and ‘ambulance chasing lawyers’ you might think this is the case but it isn’t actually true. The truth is that the number whiplash claims have fallen and continue to do so. Italy, to name but one country, has almost 50% more whiplash claims than the UK. 1
The cost of Whiplash claims in the UK is excessive - The average cost of Whiplash claims in Switzerland is ten times that of the UK, in the Netherlands almost six times as much and in Norway more than twice as much. 2(Actually fixed costs apply to these types of claims and compensation pay-outs are not particularly generous). However, in an attempt to reduce the costs further for insurers the government reacted by fixing the amount of costs that a successful Claimant can recover from the Defendant’s insurance company and shifting responsibility for payment of some of the costs to the Claimant, ie the ‘success fee’ in no win no fee agreements from the insurers to the Claimants. (Prior to this the Claimant was able to recover all of their legal fees from the guilty party’s insurance company).
Fraudulent claims were costing the industry too much money. The media has been highly effective in highlighting the problem of fraud and Courts have taken a very firm stance where fraud is proved, including handing out prison sentences as appropriate. All stakeholders, including the public and Claimant and Defendant solicitors are very much alive to the possibility of fraud and there can be little doubt that the number of fraudulent whiplash claims will continue to decline as heavy penalties handed down by the Courts are a powerful deterrent to fraudsters. Punishing honest motorists for the dishonest actions of the minority is not the answer. No right-thinking person would ever suggest that payment of welfare benefits should be reduced to those in need because there is minority of people who commit benefit fraud, but this is precisely what the government is doing by restricting access to justice for the majority of victims of whiplash.
Q. But if insurance companies are able to cut costs they’ll pass the savings on to motorists – won’t they?
Unfortunately, the evidence would suggest otherwise. Many people report that their insurance premiums have risen - not fallen – at the same time as insurance companies continue to report increased profits.
Q. So who are the winners?
The winners will be the insurance companies and their shareholders. Insurers are in no danger of losing your business as by law you must take out third party insurance, so there is absolutely no incentive for them to pass on any savings to motorists.
…and the losers?
The losers will be those who happen to be unfortunate enough to sustain whiplash injury in an accident through no fault of their own. In other words, the ordinary honest motorists.
1 APIL article February 2018
2 APIL article February 2018
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