17/02/2020

The Civil Liability Bill

After years of debate, the UK Government has decided on a course of action to bring down escalating car insurance costs by addressing the rise in pay-outs for small personal injury claims. 

The Civil Liability Bill sets out a number of measures that are designed to bring about a fairer system for addressing personal injury compensation claims for claimants, insurance customers and taxpayers. Previously, insurance brokers and their clients have relied on the Motor Legal Expenses to support their handling of such claims which has led to concern over the quality of future cover.

There’s unease in the industry that policies will provide considerably less cover and the overall claims service will change completely because of the new bill. 

Why is the Civil Liability Bill needed?

Despite reported road traffic accidents falling by 30% since the mid 2000’s, there has been a 40% increase in personal injury claims, many of which are believed to be exaggerated or fraudulent. The planned reforms have been designed to clamp down on this apparent ‘compensation culture’ by reducing cold calling, regulating claims management companies and tightening holiday sickness claims, among other measures. 

What are the government’s plans?

The Civil Liability Bill includes a range of measures designed to improve and reduce personal injury compensation claims, such as the following;

  • The limit of claims in the small claims court will rise from £1000 to £5000.
  • A new fixed compensation tariff for whiplash claims with up to 2 years recovery. 
  • The new whip lash tariff is only applicable to those in a vehicle, and not motorcyclists. 
  • Banning of settlements for whiplash claims without medical evidence of the injury. 

How will this affect me?

As it stands, claimants for personal injuries totalling over £1000 could seek the services of a solicitor, which means their legal costs would be recovered from the at fault third party and their insurer. Under the new scheme, anyone seeking a claim under £5000 will have to pay their own legal costs. 

What’s more, if successful, the amount paid out in compensation will be dramatically reduced when compared to the sum that would have been received under the current system. For example, most claims in the 0-6-month recovery period will now be capped at £470, a significant drop from the previous limit of £2,150. Any significant personal injuries sustained through a road traffic accident will fall outside of the £5000 small court limit and will be handled as they are now. 

For those whose personal injuries fall into the small claims court, but they do not have appropriate Legal Expenses cover with their car insurance, will be required to present and manage their own claim via a dedicated portal. Experts are concerned that this move will stop people getting the legal advice they are entitled to and thereby restricting their access to justice. 

While the demands of someone seeking insurance won’t change, they will still require help with alternative transport, repairs to their vehicle, recovery of losses etc., their need to pre-purchase quality, fully insured motor legal expenses policies from brokers is significantly increased. This is to ensure that even in the small claims court, the claimant receives the compensation that is due to them. 

When will the changes come into effect?

The Civil Liability Bill is due to come into effect in April 2020 however, both the Ministry of Justice and the Motor Insurance Bureau warn that it could be delayed past this deadline. Despite this warning, some legal expenses insurance providers are already raising rates and reducing policy cover. 

What should I do to get further information?

Our staff are up to speed on how the Civil Liability Bill will affect your motor insurance policies, so call the team at Lansdowne Woodward today on 01202 874 989 to learn more. With years of experience in the motor industry, our expert team can ensure that your vehicles, no matter the number or model, will have the correct cover.