Changes to the law on Personal Injury claims

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The Civil Liability Bill has now received Royal Assent which means it has now become law, but what is it and what does it mean for the victims of accidents?

This new Act will:

  • Raise the Small Claims Limit for Road Traffic personal injury cases to £5000 (£2,000 for all other accident types)
  • Introduce a fixed tariff of damages for whiplash claims with injuries lasting up to two years resulting from road traffic accidents (RTA)
  • Change the way in which the personal injury discount rate, applied to lump sum awards of damages for future loss, is set.

The changes are planned to come into effect in April 2020.

So, what does this mean?

The small claims limit for personal injury cases is currently £1,000. Effectively, this means that if the claim for personal injuries is valued at more than £1,000 then the at fault insurers will meet some or all of the Claimants legal costs. Raising this threshold to £5,000 for RTA’s (or £2,000 for all other accidents) from its current level means that many more people will have to meet all of their legal costs if they require a lawyer to act for them in their claim.

The introduction of a fixed tariff of damages for whiplash claims marks a huge shift in the way compensation is determined.

Currently, it is fair to say that, no two injury claims are alike – everybody’s circumstances will differ. Compensation is awarded for, what is technically referred to as, ‘pain, suffering and loss of amenity.’ This is the actual compensation for the injury itself and the impact the injury has on the injured person’s life.

All the individual factors are taken into account to arrive at a figure for the level of compensation, which can differ greatly depending on the individual circumstance. The level of compensation is not fixed and tools such as previous court decisions in similar cases or guidelines issued by the Judicial College Board (JCB) can be used to determine the amount.

To give an example of the current JCB guidelines, a minor soft tissue injury to the neck where a full recovery is made within 3 months is valued at a range between “a few hundred pounds to £2,150”

This is quite a broad range and the individual factors of the claim will determine the correct level

Under the new rules, a fixed tariff is being introduced for whiplash injuries lasting for up to two years. Under this tariff, the value of the same injury as above will be fixed at £225 with no account taken of the individual factors.

Finally, the personal injury discount rate calculation is to be amended.

In cases where life changing injuries occur, many of the injured party’s losses will be ‘future losses’ eg. loss of future earnings or future care.

When the injured party receives compensation immediately for losses they will incur at a future date, a discount is applied to reflect that they money may be invested and, thus, provide an investment return.

The rate is a contentious area for claimants and defendants. In 2001 the rate was set at 2.5%. In 2017, the rate was reduced to -0.75% meaning that, effectively, awards increased.

The Civil Liability Act now proposes a further review of the rate and, perhaps more importantly, give guidance or rules on how it should be set in future. It is expected that the new rate will be announced later this year.


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