Cap on whiplash claims could reduce car insurance costs

Helen Jones
Written by: Helen Jones
Posted on: 18 November 2016

Plans to cut compensation for whiplash injuries across England and Wales could see the cost of car insurance premiums fall in the coming years.

The Ministry of Justice has announced proposals to remove the right to compensation or put a limit on the amount that can be claimed for minor whiplash injuries.

Whiplash claims on the rise

Thanks in part to the UK’s growing ‘compensation culture’ whiplash claims are 50% higher than they were a decade ago, even though the amount of accidents has fallen. These claims currently cost the insurance industry £1billion a year.

Justice Secretary Elizabeth Truss explained: “For too long some have exploited a rampant compensation culture and seen whiplash claims as an easy payday, driving up costs for millions of law-abiding motorists.”

“These reforms will crackdown on minor, exaggerated and fraudulent claims.”

Cap on payout

By putting a cap on the amount that motorists can claim for whiplash, the average payout would be cut from £1,850 to a maximum of £425. And, before any claims are paid, accredited medical reports would be required.

Another measure that has been proposed is to allow small claims courts to handle all personal injury claims up to £5,000, thereby lowering legal costs.

Cracking down on whiplash claims could undoubtedly benefit the vast majority of honest motorists

Cutting nuisance calls

As it becomes more difficult and less worthwhile to make a whiplash injury claim, it’s hoped that the number of unsolicited calls members of the public get from claims management companies should also reduce.

Working alongside the Government

A Direct Line spokesperson said: “We’re very pleased that the Government has finally published the consultation paper on whiplash reform, as we’ve been calling for legislation to reduce the number of spurious injury claims while ensuring those genuinely injured in an accident are compensated accordingly.

“Cracking down on whiplash claims could undoubtedly benefit the vast majority of honest motorists and the measures outlined in this consultation will be crucial to get the problem under control.

“The consultation paper is a vital first step and if implemented will lead to effective reform. We’ll be working closely with the Government to secure a positive outcome for our customers.”

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