Notes for Guidance in Accident Claims

The law regularly changes, and the following notes are intended for general guidance only. They are neither comprehensive nor necessarily applicable to every claim, and should not be viewed as an alternative to taking professional legal advice.

General Damages

The value of compensation due for a personal injury will be assessed by reference to the medical evidence obtained in support of the claim and on the strength of decided case law and judicial guidelines.

The award will be for ‘pain, suffering and loss of amenity’, and as such cannot be readily measured in monetary terms. When the value of a head of compensation has to be assessed in this manner it is referred to as ‘general’ damages.

Compensation can be awarded for both physical and psychiatric injuries.

Special Damages

When a loss can be quantified, or has a specific value, this is referred to as an item of ‘special’ damage. Some examples are set out below, together with a brief guide in italics as to the type of evidence required as proof or evidence of the loss, or what may be agreed without evidence (so long as that loss has actually been sustained). A claimant should keep a record of all costs for which a claim is to be made, and save all relevant documentation in support:

Treatment costs:

Fees / Receipts / Invoices

The costs of necessary and established forms of treatment, such as physiotherapy or osteopathy, are usually recoverable for a period of time, in particular if recommended by a GP, and noted in your medical records. So, a consultation with your GP about your injuries is advisable, both generally and for this reason.

The cost of ‘alternative’ treatment (i.e. massages) or remedies (i.e. homeopathic) may not be awarded by a court and may not be recoverable, especially if not approved by your GP.

Travel costs associated with the accident:

Receipts are recommended, but insurers may well agree around sum of around £25.00 - £50.00, if this is consistent with the amount actually travelled because of the accident.

Fuel costs:

These will generally be agreed at around 35 pence per mile. You will need to keep a record of mileage travelled and what this was for.

Only travel costs associated with the claim will be considered and you will not be paid where there is a duplication of claims.

Postage/phone calls/miscellaneous costs associated with the accident:

These may well be agreed at around £15.00 or £20.00. You will need to produce strong evidence to persuade an insurer or an eventual court to pay more.

If applicable, medication, including prescriptions:

Subject to medical evidence, and in relation to minor injuries, these may be agreed at around £10.00 - £20.00, if you did in fact take medication. You will need to produce specific proof (i.e. by way of receipts, supported by the medical evidence) if you wish to claim a higher figure.

Broken or lost property, damaged clothing:

If you do not have original receipts, most retailers, selling the type of item in question, will supply a pro-forma invoice or valuation/quote on their letterhead, if you explain that you are making an insurance claim. If clothing needs to be cleaned or mended, please keep the receipts.

It is advisable to keep the damaged item/s in case the third party insurer asks for an inspection. If you have to dispose of any item then please take photographs first, clearly showing the damage, for future reference.

The legal concept of ‘betterment’ may apply, under which you are only entitled to a refund, or replacement on a ‘like for like’ basis. Typically when a claim is being made for used items, the new replacement cost is reduced by about one third.

Loss of earnings:

If you have suffered a short-term loss of earnings, the conventional way to calculate your net loss is by obtaining an average figure from pay-slips for thirteen weeks prior to the accident, if employed; or we will need to request a report or letter from your accountant, if self-employed.

If you are off work for a significant length of time we may well need to investigate further, review your income over a longer period of time and potentially recover your personal accounts and / or other documentation and evidence in support of this head of claim.

Recovery of any loss will depend upon medical evidence which confirms that the time off work was due to injuries sustained in the accident and not for other unrelated reasons.

If you are being paid by your employers while you are off work they may wish to recover their outlay, but this must be provided for in your contract of employment.

Lost holiday:

It can be convenient to claim lost holidays at the same daily rate as your income, for example when you have to take time off as holiday, while you recuperate from the injuries. If you have actually missed out on taking a holiday because of the accident, then please provide documentary evidence of the cost of the holiday, so that we can try to recover that lost expense on your behalf.

Care:

The time and amount we can recover for care provided by members of your family will depend on the extent of your injuries and the degree of care reasonably required. In very many cases there will be no claim for care and assistance.

Any care claim, and the amount of assistance, will need to be supported by the medico-legal expert.

The courts tend to apply set hourly rates, based upon published statistics, with a 25% reduction when care is provided by a family member or friends, to allow for the ‘gratuitous’ nature of that assistance (primarily because tax will not be paid on the sums received).

If care is necessary, this will suggest that rehabilitation treatment may be required, in which case an instructed solicitor would usually involve the third party insurers.

You should keep a diary record of the type of assistance provided, the number of hours spent daily, who provided the care and over what periods the care was needed.

Please bear in mind that any claim for care must always be realistic and proportionate to the actual disability caused by the injuries, and the number of hours claimed must accurately represent what has in fact been done.

In more serious cases, it can be helpful to present a care claim in three sections, to cover an initial period of significant symptoms and higher dependency, followed by a second and third period, as the recovery continues and needs reduce.

In very serious cases a solicitor would consider instructing a ‘case manager’ to overview rehabilitation generally.

The above list relating to special damages is of course not exhaustive, but we hope will assist.

Unfortunately the courts do not award compensation for the general inconvenience of having been involved in an accident, and/or the overall time engaged and administration this inevitably involves.

Duty to Mitigate

The law imposes a duty on all claimants to mitigate loss. Therefore you must not expect to recover compensation for all losses incurred, if there is some way you can control the expense or cost involved.

For example, if you are fit to return to work, or it is likely that the medical expert will consider that you could have returned to work by a specific date, then you should not expect to receive compensation for loss of earnings after that date.

Funding

If we assess prospects of making a successful recovery at 51% or more, we will consider offering to act under the terms of a conditional fee agreement, and, if necessary, but not before consultation, to take out ‘after the event’ (ATE) legal expenses insurance, to protect you against the risk of a defendant’s costs order in certain circumstances, and to insure for the actual out of pocket expenses of the claim; such as the costs of obtaining medical evidence, or court fees.

As an example of a potential costs order against you; in the event that the defendant makes a formal offer (a Part 36 Offer) to settle your claim, and you reject the offer, or if the offer expires, then if the claim progresses to trial and the Judge determines that you should have accepted the above offer (or if a lower amount is awarded), you will be responsible for payment of the defendant’s costs from the expiry / rejection of the formal offer.

However, if you have secured a valid ATE policy which provides you with protection from adverse costs, you may not have to pay anything to the defendant in the event that a costs order is made against you, because these costs will be met by the ATE insurers.

If an ATE policy is taken out, you will ultimately be responsible for payment of the insurance premium. However, you will only have to pay the premium if your claim is successful.

Please see below for further details on Part 36 Offers.

If you do have ‘before the event’ (BTE) or pre-existing legal expense insurance which offers suitable legal expenses cover, we will contact those insurers. If they confirm their indemnity and authorise us to act, we will cancel the ATE policy at no cost to you, and we will also cancel our CFA and will run the claim on a ‘private client’ costs basis, chargeable to your insurers and / or to the defendant’s insurers if the claim succeeds.

If we are prepared to handle your claim under the terms of a CFA, we will usually not charge any costs if the claim fails. Exceptions may apply if, for example, we are misled by a claimant, or if the prospects of success alter to 50% or less, but the claimant still wishes to proceed.

However, if a claim succeeds, we will charge a success fee, which is usually calculated at around 25% of the value of the claim for general damages and past financial losses.

Exceptionally the success fee may have to be agreed at a higher rate (if we are prepared to act), to reflect an increased risk, for example if the prospects of success are assessed at lower than 51%, or if we know or assess that we will be facing a determined Defence, especially on a claim where other solicitors have refused to act, or perhaps refused to continue to provide representation.

Liability

Compensation / damages will only be paid if a claimant is successful in proving that the opponent was responsible for the injuries and any direct financial losses. If contributory negligence is established, then damages will be reduced on a pro-rata basis.

Causation (and credibility)

A claimant will be required to prove that the symptoms (and all other losses) were caused by the accident and did not come about in whole or in part because of some unrelated reason.

This means that it is very important to make full disclosure of any significant pre-existing condition, or previous injury that may have been affected by an accident, and/or any previous accidents that might otherwise be considered relevant to the claim.

This is the only way an expert can be expected to give an informed opinion on causation, especially if a medical report is being prepared without review of the records, in potentially lower value claims.

This duty to disclose information also applies if a claimant is unlucky enough to be involved in a subsequent accident, especially if another injury is sustained, even if this may appear to be completely unrelated to the injuries in respect of which another claim is being made.

These points are being stressed, because there can be a fine line between a dispute on causation and a defendant trying to challenge a claimant’s general credibility; if a potentially relevant factor comes to light (i.e. following review of medical records) which arguably should have been disclosed by the claimant.

The Compensation Recovery Unit (‘CRU’)

Your opponent’s insurer is prohibited, at law, from paying a claimant any compensation, until the claim has been registered with the Compensation Recovery Unit of the Department of Work and Pensions, and a Certificate of Deductible Benefits, or a ‘CRU Certificate,’ has been issued by the DWP.

The certificate states whether or not any benefits have been paid to the claimant because of the accident. If not; the insurer is free to pay any agreed compensation.

If benefits have been paid, then these have to be refunded to the DWP, by the insurer, before the claimant is paid the balance of any compensation.

(A similar scheme exists for repayment of treatment costs to the Department of Health.)

Compensation Payments, Means Tested Benefits and Personal Injury Trusts

If a claimant receives certain state benefits, local authority assistance and / or other sources of state assisted help, either now or in the future, then he or she may be in danger of losing entitlement to these, or being prevented from claiming them, as a consequence of receiving a personal injury damages award.

This will depend on an individual’s personal circumstances, both in the present and in the future, but generally speaking, if a claimant is in receipt of means tested state benefits, a payment of compensation (whether interim or final) will count as capital, when assessing eligibility for most means tested benefits.

Means tested benefits include:

  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Pension Credit
  • Housing Benefit
  • Council Tax Benefit

If a claimant should deliberately deprive himself or herself of capital in order to claim or increase a state benefit, the claimant will still be treated as possessing that capital, for assessment purposes.

‘Deprivation’ of capital may include spending money to carry out necessary repairs or alterations to a home, an expensive holiday, paying off debts, or family loans, and / or making gifts to friends or family.

This problem can be solved by establishing a Personal Injury Trust; otherwise frequently referred to as a ‘Special Needs Trust’.

Under Social Security Regulations, personal injury damages awards held in a Personal Injury Trust are ignored for most means tested benefits and other sources of state funded financial help.

Once the Trust is set up, an account is opened by your Trustees for your benefit and this is run on the understanding that they will look after it in line with your wishes, and rules designed to protect your interests.

Social Security benefit legislation can be complex and is not an area in which we practice, or can advise you on in the context of a personal injury claim.

Therefore, we do not assess whether or not a personal injury trust would be appropriate in any applicable case. It is the claimant’s responsibility to evaluate his or her your own circumstances, and to take independent financial advice if this is considered to be necessary.

However, we will be happy to refer claimants to an independent financial advisor, specialised in this field, if we are asked to do so.

An initial consultation will probably be offered by the financial advisor free of charge, but any professional fees which are incurred for this independent financial advice will be the claimant’s responsibility and will be completely separate from the terms of our engagement.

They will probably not be recoverable from an opponent, so a claimant will need to carefully assess the financial value of setting up a trust against the expense this will involve.

The Claims Process

The general management of personal injury claims is subject to a procedural protocol, set out in the Civil Procedure Rules, which provides a framework and timetable for the steps we take and the way in which we obtain evidence in support of a claim, and in particular the medical evidence.

This pre-action personal injury protocol is designed to keep costs under control, minimise delay in the claims process, and encourage co-operation between the parties.

Alternatively, a high proportion of uncontested personal injury claims with a value of less than £10,000.00, are handled under a separate electronic claims process.

Both schemes operate alongside a rehabilitation code, created to protect the interests of injured parties and to ensure the availability of early treatment, funded by the third party insurers, if necessary.

When we have accepted instructions, we will try to obtain an admission of liability and agree arrangements for a medical report with the third party insurers, as soon as possible. These insurers should be in contact with their insured, and making their own enquiries into the accident circumstances, which can lead to some delays in the early stages of a claim.

Even so, we ask claimants to inform us straight away if there is a need for need rehabilitation treatment and/or if the claimant is having significant financial difficulties because of the accident, or needs a replacement vehicle in road traffic accident cases, or if urgent repairs should be carried out. If so, we will chase the third party insurers as a priority.

We will try to obtain an early interim payment (i.e. for treatment costs, loss of earnings, or vehicle repairs/excess in appropriate cases). This should be possible when the third party insurers accept that their insured was responsible for the accident, and have been provided with documentation in support of interim expenses.

A medical report on a claimant’s injuries should be prepared shortly after our initial instructions, although sometimes it is sensible to put the report off for a while; for example if a claimant is still receiving treatment and/or if the expert cannot otherwise be expected to make a final prognosis.

If the medical expert says that a claimant has made a complete recovery, or if the claimant is satisfied with a prognosis for recovery within a set period of time, we can then try to negotiate a full and final settlement agreement. We may otherwise need to put a claim on hold for a period of time, while the claimant continues to recover from the injuries, in which case further medical evidence may be required.

We will normally only go to court if liability is in dispute; if injuries fail to resolve within three years and we have to issue proceedings on limitation grounds; or if we are unable to reach a compromise agreement with the third party representatives.

If a child is being paid compensation, the Civil Procedure Rules provide that the Court must approve the settlement. This will typically take place at a relatively informal hearing in a court office. The normal Order is for damages to be invested in the court special interest account until the child reaches the age of 18 years.

Part 36 CPR

Either party may at any time place the other party under very strong pressure to settle the claim, by making an offer pursuant to Part 36 of the Civil Procedure Rules 1998, as amended.

If a subsequent outcome is more favourable to the party making the offer, then significant costs penalties can apply.

When a Part 36 Offer is made, if a claim is being funded outright under a LEI policy, or even if the LEI policy is limited to payment of a defendant’s costs, then as a broad rule, if you receive an offer which is within 20% of what you might expect to achieve at a court hearing, the LEI indemnity will probably be withdrawn.

At this point it is also usual for us to review whether or not we can continue acting under a CFA, or whether this should be amended to a private client paying retainer, if the claimant wished to bear the increased risk of carrying on with their claim.

Limitation

A claimant has three years from the date of the accident (or from the 18th birthday in the case of a child) within which to settle a personal injury claim without the need for court proceedings.

If the case has not settled within this period then, with few exceptions, court proceedings must be issued, or the claim will become statute barred, with the loss of all entitlement to compensation.

Generally

If a claimant delays bringing or advancing a claim, then, as time goes by, it can become harder to prove the claim, on both liability and quantum. It can also become more difficult to obtain funding for the claim, to find a solicitor willing to act, or an insurer able to underwrite the claim against a defendant’s costs.

So, it is in the claimant’s best interests to work with a solicitor, to keep appointments, and to deal promptly with all correspondence as the claim progresses.

It is also important to remember and be aware that a claimant is generally involved in just one claim, while the solicitor will be handling hundreds of claims, often on very low fixed costs, and so co-operation and assistance from a claimant throughout their claim is always essential.

Broadgate Legal Solicitors