*Update July 2018*
The Ministry of Justice says the government will delay reforms to crack down on whiplash claims until at least April 2020.
The reforms included plans to introduce fixed compensation for whiplash claims where the injury affects someone for up to two years, a ban on whiplash claims without medical evidence and an increase the small claims track limit for road traffic accidents to £5,000 from £1,000.
Aviva says the delay to the reforms could cost motorists up to £1.8bn.
Check out our guide to the best car insurance companies.
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*Update May 2018*
The Justice Select Committee has advised against an increase of the small claims limit from £1,000 to £5,000, saying that it would deny people who suffer genuine injuries access to justice.
In a Small Claims Track report, the committee expressed worries that the reform could lead to a claims process that does not support the Supreme Court's principle of "unimpeded access to the courts". They explained that the small claims limit should only increase to reflect inflation rates from 1999, which would make it £1,500.
The committee called for more "nuanced data" from the ABI, expressing concerns that current data on insurance fraud is insufficient and unreliable. It recommended that the government collaborates with relevant agencies to monitor the reduction of premiums over the next 12 months in order to determine whether they've happened as a result of whiplash compensation reforms.
The ABI still supports the government's planned whiplash clampdown, and criticised the Justice Select Committee's report, saying that, if accepted, the recommendations would not help in "reducing the number and costs of whiplash-style claims; and lead to honest motorists continuing to pay higher car insurance premiums".
The ABI said they were confident the current data is "transparent and reliable" and that it is "happy to work with the government and other stakeholders on this issue."
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Whiplash reform is back on the table after ministers last month proposed setting fixed amounts of compensation for whiplash claims and forcing claimants to provide medical evidence.
They also proposed changes to the way personal injury payouts are calculated following serious injuries – this is known as the Ogden rate.
The proposed whiplash reform is expected to come into force in April 2019 aims to tackle compensation culture and lowering car insurance premiums.
The plans have already caused insurance premiums to fall, according to Confused.com.
Read our guide to the best car insurance companies or use Confused.com to compare companies.
Read on to learn more about the proposed changes and how they'll affect car insurance premiums and motorists.
Whiplash laws changes suggested in 2018
The Civil Liability Bill introduced by Justice Secretary David Guake in March 2018 aims to reduce the high number of whiplash claims, which should reduce the cost of car insurance premiums for motorists.
The government says: "Road traffic accident related personal injury claims are 50% higher than a decade ago, despite the fall in the number of reported accidents and the UK having some of the safest roads in Europe.
"This rise has been fuelled by predatory parts of the claims industry that encourage minor, exaggerated and fraudulent claims, driving up the costs of insurance premiums for ordinary motorists."
The bill builds on from the changes suggested in 2016, which were put on hold when the Government called a general election.
A tariff scheme has been proposed to determine how much a claimant should be awarded. The amount will depend on the length of the injury, which is expected to cover injuries between 0 and 24 months.
Car insurance premiums have dropped 13% over that past year in anticipation of the new rules, according to Confused.com.
In addition, the government will also up the small claims 'track limit' from £1,000 to £5,000, we explain what that means here.
What is the average payout for whiplash?
The average payout for whiplash is currently £1,850. The payout for a whiplash injury will depend on the severity of the injury.
However, for minor whiplash injuries, which is defined as when recovery is made within the first year of the accident, the average payout is between £1,000 and £2,500.
But these compensation levels are changing. From October 2018, compensation for minor injuries due to an accident on the road, including whiplash, will be fixed at a set price. The lowest amount you could receive will be set at £225 and the maximum will be £3,725.
How much you get for whiplash will vary depending on the seriousness of the injuries you have received.
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What is a whiplash injury?
Whiplash refers to a range of injuries to the neck. It is commonly associated with road accidents, especially from shunts and crashes.
Whiplash is usually characterised by pain in the neck and the back, headaches, and pins and needles in the arms and legs, but may also include distraction, irritability and pain in the shoulders.
According to The Guardian, there were 750,000 small claims cases related to whiplash in 2015.
The below information relates to whiplash reforms proposed in 2016. Some may be included in the 2018 bill but the specifics have not been confirmed.
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Whiplash laws changes suggested in 2016
The government thinks too many people are making frivolous or fraudulent claims for whiplash. Its argument is that this costs both insurance companies and the country around £2bn a year, and results in higher car insurance premiums.
To try to solve this, the Ministry of Justice launched a consultation in November 2016 on proposals to change the laws surrounding small claims. In February 2017 the government announced their plans, saying they would come into effect in October 2018.
You can check the average cost of car insurance here or see our list of the best car insurance companies.
What has changed with regards to whiplash compensation?
The government plans to lower the maximum whiplash payout to between £225 and £3,725, depending on the length of the injury. At the moment the average payout is £1,850.
The government will also up the small claims 'track limit' from £1,000 to £5,000 and introduce a transparent tariff system of compensation payments for claims with more significant injuries.
And it will ban offers to settle claims without medical evidence. All claims will need a report from a MedCo accredited medical expert.
What does this mean?
Most of the changes are self-explanatory but the small claims court limit takes a bit of understanding.
If you suffered whiplash while in a car accident you believed was the fault of another driver you could make a claim against them and, if you were successful, their insurance company would pay out compensation. Once the changes come into effect the maximum payout will be £3,725 if the injury lasted between 19 and 24 months.
However, if the claim is rejected and you still want to pursue it you would have the option of taking it to small claims court. The small claims court is the process of claiming money you’re owed by a person or business - usually under £10,000 - through a county court.
The court does not usually award legal costs so most people choose not to use a lawyer. Although it means you have to spend time preparing a case, it does make the process affordable for most people.
Currently, the track limit for personal injury claims is £1,000, which means claims above that amount will be heard in another court that may be more likely to award legal costs to the winner.
The government is raising the limit to £5,000, which may sound like a positive move but it means members of the public will have to make claims for more significant amounts of money on their own. If they do decide to enlist a solicitor, they won't be awarded their costs if they win.
The government has specified that these changes will not affect major psychological conditions caused by a traffic accident, such as depression or post-traumatic stress disorder. However, it will affect minor psychological injuries, such as shock and travel anxiety.
How might the new whiplash law reforms affect me?
Insurance companies and the government have said that premiums could drop by up to £40 as a result of the changes.
This is because the reforms will cut down on the number of fraudulent claims for whiplash, which will save insurance companies money. Several insurance companies, including LV=, have suggested that they will pass on savings to customers.
This may be welcome news for some motorists, considering car insurance premiums have been steadily rising for the last few years.
Unfortunately, many people do not trust insurers to pass the savings on. 67% of 510 people surveyed by Consumer Intelligence said they think companies will pocket the difference and they won't see a change in their premiums.
And the increase in the small claims limit to £5,000 might be a problem for people who try to make a genuine claim for personal injury damages. This means that you can't reclaim the cost of legal representation if your claim is for less than £5,000. You'll either have to fork out the money to pay for a lawyer or represent yourself, which may not be an attractive prospect for some people.
The government argues that low-value injury claims are simple enough to resolve that most of the time they do not require a lawyer, but some are worried that many people will simply abandon their claim, even when they could potentially be owed damages.
On top of this, you will have to provide medical evidence if you are making a whiplash claim, which could cost around £200. Whiplash can be difficult to prove, so you may need a professional diagnosis from a private GP or medical records in order to be successful with a claim.
Some have said that as many as 35,000 jobs could be at risk due to the new changes, too.
How to claim for whiplash on your car insurance
The new laws shouldn't affect your ability to claim through an insurance company. However, they will define how much money you can receive, and you will have to follow the new procedures set in place if your claim arises after the expected implementation date of October 2018.
Claiming for whiplash should be similar to claiming for any other injury suffered due to an accident on the road.
If it is decided that it wasn't your fault, you can make a claim against the person whose fault the accident was. The matter will be dealt with by their insurance company, who will generally require some evidence of your medical condition before deciding whether to pay out for your claim or not.
It's worth taking into account customer service reviews when choosing an insurer. A company may have a low price but you may wish you paid more if you have a poor claims experience.
We take into account customer service ratings in our list of the best car insurance companies.
What happens if you are at fault in a car accident?
If you are found to be at fault in a car accident, your insurance company will usually pay out a claimant's medical expenses, repairs, or other expenses through your liability cover. Liability cover is a minimum legal requirement in the UK for driving a car - if you haven't got it, you can get up to six points on your licence and, if the case is taken to court, an unlimited fine.
With regards to your own medical expenses and repairs, this will depend on the cover you have. If you only have third party, fire and theft, your insurer will not pay for any repairs to your car in an accident that's your fault. However, if your cover is comprehensive, they might give you money towards your medical expenses and towards the cost of fixing your vehicle.
For more information on car insurance, check out our article on the best car insurance companies of 2018.
We also have guides to the best car insurance for young drivers and black box policies.
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