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Car insurance premiums set to fall as government cracks down on whiplash claims

Car insurance premiums set to fall as government cracks down on whiplash claims


The government is looking to tackle fake or exaggerated claims for whiplash from car accidents with new legislation.

Whiplash injuries cost the insurance industry up to £2bn per year, according to the Association of British Insurers (ABI), with some 1,500 claims a day. That sum is passed on to consumers, with £90 a year added to the average insurance premium. Since the average cost of cover is £481, that means whiplash claims are responsible for nearly a fifth of a driver’s insurance cost.

The new Civil Liability Bill, which started in the Lords, where it had its first reading in March, aims to cut the number of spurious personal injury claims. It will bring in a set payment scale, with people only able to claim up to £3,725 except in exceptional circumstances.

It will also prevent insurers settling cases without a doctor’s involvement, with diagnosis based only on a doctor’s questioning – although whiplash is notoriously difficult to disprove.

The government also plans to raise the maximum compensation allowed for personal injury cases in the small claims court from £1,000 to £5,000. This would keep all but exceptional whiplash cases out of the higher courts, reducing the need to use lawyers and drastically cutting the legal fees involved. 

It would also give law firms less incentive to launch spurious claims. The ABI said that legal fees currently cost 50p for every £1 of whiplash compensation paid.

The Bill has passed through the Lords but still needs to complete its report and third committee stages in the Commons. If all goes to plan, it could get royal assent early in 2019 – with the changes brought in by April 2020.

However, reports have suggested there may be a rise in personal injury claims – both whiplash and non-whiplash – before the Civil Liability Bill becomes law, as companies try to make the most of the current, less strict regulations.