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    The Civil Liability Bill: how will it affect motor insurance?

    Advice, Article, Featured Article, Information, Insurance, News

    After many years of debate, the UK government has decided on a course of action to address the rise in small personal injury claims. The Civil Liability Bill, which comes into force in April 2020, aims to tackle the perceived ‘compensation culture’ and prevent fraudulent claims from driving up the cost of insurance for motorists and clogging up the courts.

    Why the change?

    Personal injury claims related to road accidents, e.g. for things like whiplash, are becoming more and more common in the UK. While road accidents have fallen by 30% since the mid-2000s, there’s been a 40% rise in personal injury claims.

    The UK government believes many of these claims to be fraudulent or exaggerated, and wants to deter such claims from coming to court, while enabling legitimate claimants to handle their own small claims.

    What are the new rules?

    Under the Civil Liability Bill:

    • Compensation tariffs for personal injury claims are fixed at a lower rate
    • Whiplash claims will require medical evidence to be considered and settled
    • The small claims court limit will be increased from £1,000 to £5,000

    Because of the lower compensation tariffs for personal injury, and the increased limit for small claims courts, many personal injury cases are now likely to go through small claims rather than being settled directly with insurers.

    Following the ban on settling a case without medical evidence, insurers will no longer be able to make out of court settlements in order to pay off a case. Claimants will therefore have to take their case to a small claims court, meaning that unless they have insurance to cover their legal costs they would have to pay the court fees out of their own pocket.

    A new fixed compensation tariff for pain and suffering for whiplash claims will be used for injuries lasting up to 2 years. The compensation pay-out amounts have been significantly reduced, and capped.

    Injury DurationNew max payout from April 2020Value as at 2015
    0 – 3 Months£235£1,750 – £2,150
    4 – 6 Months£470
    7 – 9 Months£805£2,600 – £3,100
    10 – 12 Months£1,250
    13 – 15 Months£1,910£,3500 – £4,500
    16 – 18 Months£2,790
    19 – 24 Months£3,910

    How does the Civil Liability Bill affect insurance costs?

    Because insurers are less likely to be paying out as frequently or as much, they are likely to make savings across the board. Many insurers have committed to pass these savings on to customers, meaning standard car insurance costs should go down for many people.

    The cost of motor legal cover, an optional insurance which covers legal costs related to motor claims, is set to rise because of the reforms. As the amount a solicitor can make on a claim is being capped, legal service providers are increasing the cost of cover to compensate for the loss of earnings on personal injury cases.

    What if I have a legitimate claim?

    If you have motor legal protection, you can still access a solicitor for smaller claims that fall under the new small claims court limit. Solicitors are unlikely to take on a case independently now that they cannot earn as much from cases, and claimants may be required to present and manage claims themselves. There is concern that consumers will not have the correct legal advice to do this.

    The government intends to provide a portal for the public through which they can manage their own claims, and gain guidance to represent themselves in court. There is concern that this makes it difficult for the public to get appropriate legal advice and support to bring claims for compensation they are genuinely entitled to by law.

    Motor legal protection cover will fully fund the cost of accessing a solicitor for these smaller claims which fall under the new small claims courts limit.

    Will there be changes to motor legal cover?

    If you have motor legal cover through Heritage, the claims service will not change. Whether you need to make a claim for injury that goes to court, or your case falls under the small claims court limit, the ALPS legal team will handle your case for you and all costs will be covered.

    If you have any questions about your motor legal cover or anything else related to how the Civil Liability Bill may affect you as a motorist, we’ll do our best to help. Give us a call on 0121 248 9229 or send us a message below.

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    Update – 7th May 2020

    The Civil Liability Bill was set to come into force in April 2020; this has now been postponed until 2021. The initial delays were due to the Government stating the need to give the industry sufficient time to “prepare their business for the changes”; since then, the coronavirus crisis and further delays to the readiness of the online portal for claims management have set the reforms back further.  

    To find out more about the Civil Liability Bill, click here.


    ALPS (Auto Legal Protection Services), 2019

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