Whiplash Reform - the Civil Liability Act
The Civil Liability Act reforms, which will come into effect in April 2020, aim to tackle the endemic whiplash culture in the UK and in turn reduce the cost of motor insurance for everyone.
Specifically, the reforms will act by both reducing the compensation paid out for whiplash injuries and also reducing the amount to be paid in claimant legal fees.
Whiplash claims currently cost insurance companies £2bn a year and this is estimated to add £90 a year to the average motor insurance premium.
For any whiplash injury affecting the claimant for less than two years a tariff system will be used to give a prescribed value to the injury. At present for whiplash affecting a claimant for six months an insurer could expect to pay them around £2,000 plus full costs, however under the new tariff system the amount would be £450 plus reduced costs.
With regard to legal costs the amount that claimants will be able to recover from the defendant (and their insurers) is substantially reduced. At present the "small claims track" applies for claims up to £1,000 in value and under this protocol a claimant can recover only £80 in legal costs. The limit for the "small claims track" is being increased to £5,000, meaning that most whiplash claims will now fall under the scope of this procedure. For comparison, at present for any claim worth between £1,000 and £10,000 a claimant can recover £1,300 in costs.
As with any new personal injury law many challenges to the new system are to be expected and in order to feel the full benefit of the reforms it will be vital to ensure your insurance broker fully understands them and can keep you well informed of the handling of any claims against you.
If you would like any further information on the Civil Liability Act or how we control customer claims please feel free to get in contact.