Is a claim for between £1 and £5,000 really a small claim?
Tuesday 17th May, 2016
George Osbourne has announced the Government’s intention to raise the small claims limit for personal injury claims from £1,000 to £5,000. Although a seemingly insignificant move and certainly one that did not get wholesale press coverage, it is a move that could have far reaching and perhaps unanticipated results.
Why does the Government want to increase the limit?
George Osbourne said “The Government is determined to crack down on the fraud and claims culture in motor insurance. Whiplash claims cost the country £2bn a year, an average of £90 per motor insurance policy, which is out of all proportion to any genuine injury suffered. This will end the cycle in which responsible motorists pay higher premiums to cover false claims by other. It will remove over £1bn from the cost of providing motor insurance and the government expect the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.”
Yet, by raising the small claims limit it is likely that 85% of injured people will be denied legal representation and will be left to fight their own battle against the might of insurance companies. In Courts that are already overstretched and without legal know-how. Is it fair that every innocent and honest victim loses out on compensation for genuine and painful injuries because of a small fraudulent minority.
Surely the Government should be looking at other ways of weeding out fraud, such as:-
· Stopping insurers making offers of settlement before medical evidence is obtained
· Allowing insurers and solicitors to share data on fraudsters
· Reducing the limitation period to bring a claim from 3 years to perhaps 12 months
· Imposing harsher penalties on people bring fraudulent claims and make cold calling, an industry that blights the claims industry illegal with harsh penalties for offenders.
Who will be affected?
The short answer - Everyone
It is a long established principle of the law of tort that if a person suffers injuries as a result of the negligence of another party, that victim is entitled to seek compensation to put them in the position they would have been had the accident not occurred.
Cases likely to fall within the bracket of a small claim will include cases where a victim has suffered injuries taking up to 18 months to resolve. Injuries resulting in weeks off work, injuries resulting in lost earnings, prescription costs, treatment costs and injuries preventing victims from driving or enjoying their hobbies. Even claims for a broken foot or wrist may fall into the small claims bracket, the recovery period may be relatively short but a person is likely to suffer a significant restriction on their capabilities during this time.
Whilst not placing blanket ban on a person’s ability to claim the proposals will result in injured people fighting their own claims in the small claims court without legal representation. Innocent victims will be expected to value their own claims and obtain the necessary evidence to support their claims. Where liability is disputed the people will be expected to conduct their own investigations and obtain all relevant evidence to fight the financially strong and experienced insurers.
Put simply these are important cases, important to the innocent victims whose rights of redress will be restricted under these proposals. Whilst £5,000 may be ‘small’ for the multi million pound insurance industry, for people for whom £5,000 represents a few month’s salary this is not a small claim.