The Civil Liability Bill – Whiplash Reforms
What does this mean for you and Motor Legal Insurance?
After many years of discussion and debate the government signed off on a course of action to drive down the cost of car insurance by addressing rises in motor insurance pay outs for small personal injury claims.
The government through the Civil Liability Bill, which gained Royal Assent on 20 December 2018,
sets out a package of measures to bring about reforms to personal injury compensation that they
believe will mean a fairer system for claimants, insurance customers and taxpayers.
Why the change?
Whiplash style claims in the UK are more common than in any other major world economies. It is reported that road accidents have fallen by 30% since the mid 2000’s, but conversely there has been a 40% increase in personal injury claims. The government believe many of these personal injury claims are exaggerated and fraudulent. The planned reforms are designed to clamp down on the perceived compensation culture.
We will also see action taken on cold calling activity (the bane of everyone’s life!), regulation of claims management companies and a clampdown on holiday sickness claims, amongst others.
Savings to insurers are estimated to be around £35-£40 per policy and insurers have committed that they will channel this back, resulting in customer insurance savings.
What will change?
The reforms will see the small claims court limit increased from the current £1,000 to £5,000.
A new fixed compensation tariff for pain and suffering for whiplash claims will be operable for claimants with an injury recovery period of up to 2 years.
A whiplash claim injury is defined as neck, back and shoulders.
The new compensation tariff will only be applicable to occupants of a vehicle in a Road Traffic Accident and excludes motorcyclists.
Also, in exceptional cases the Judiciary could increase the compensation by a set amount. A ban on settling or seeking to settle whiplash claims without medical evidence of the injury will also be introduced. This will prevent defendant insurers paying off low value claims rather than incur the expense of investigating them properly.
What will the changes mean for you?
In the current process, a claimant for any personal injuries over £1,000, would have utilised the services of a solicitor whereby their legal costs would be recoverable from the at fault third party and their insurers.
The new changes will now mean that any claimant without a pre-purchased Motor Legal Insurance policy, who wants to utilise the services of a solicitor for a small personal injury claim under £5,000, will have to pay for their own legal costs or will be required to present and manage their own claim via a dedicated online portal.
Of course, any significant personal injury claims, sustained through a Road Traffic Accident which fall over the £5000 small claims court limit will be handled as they are currently are.
It is estimated that 90 – 97% of all Road Traffic Accident personal injury
cases will now fall within the new whiplash compensation tariff.
In the event of a non-fault accident, your motor legal expenses policy will help you:
- Find alternative transport
- Arrange for your vehicle to be repaired
- Obtain recovery of uninsured losses
- Obtain recovery of loss of earnings
- Recover your excess
- Assist in Personal injury compensation
The proposed changes will further increase the need for you to
pre-purchase a quality, fully insured motor legal expenses policy.
