Car insurance costs due to fall from a clamp on fraudulent whiplash claims

Car insurance premiums are expected to fall next year as insurers react to government action to stop dubious whiplash claims.

According to the Association of British Insurers (ABI), there are 1,500 whiplash claims a day and they costs insurers up to £2billion each year. This adds around £90 a year onto the average car insurance premium for drivers.

With average cost of cover around £481, this means whiplash claims are responsible for nearly a fifth of a driver’s insurance cost.

Many whiplash claims are fake or exaggerated and as there is no definite test for whiplash and doctors only diagnose it by asking questions, many fraudsters manipulate this.

The new Civil Liability Bill aims to cut the number of fraudulent personal injury claims. It will introduce a set payment scale with a limit of £3,725 except in exceptional circumstances.

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 aims to keep all but exceptional whiplash cases out of the higher courts, reducing the need for lawyers and so dramatically cutting incurred legal fees.

The ABI reported 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 also suggested that before these changes are enforced, there may be a rise in personal injury claims, as companies try to make the most of the current, slacker regulations.