People injured in car crashes will get faster and bigger payouts after insurers lost a major court battle on how claimants should be compensated.
The Supreme Court decision also means that a backlog of thousands of cases are now free to get settled.
But the decision may mean higher car insurance premiums, or at least no drop in prices – with these already averaging £543 in 2023.
Here is everything you need to know about how the decision affects your crash compensation.
Crash test: The insurers’ appeal was heard the the UK’s highest court, the Supreme Court
What does the Supreme Court decision mean for me?
The Supreme Court said this week that so-called ‘mixed injuries’ from car crashes – i.e. whiplash and another ailment such as wrist or hip damage – should be liable for two separate payouts from insurers, adjusted downwards in the case of any overlap.
In practice that means higher overall compensation for drivers injured in multiple ways.
If insurers had won, the non-whiplash part of any compensation would have been capped in the way that whiplash is currently.
What is the whiplash claims cap?
Since 2021 whiplash claim payouts have been capped by a set tariff starting at £240, with only the most severe cases exceeding £5,000.
The tariff was introduced as part of reforms pushed for the the insurer trade body, the Association of British Insurers (ABI), in response to what it saw as an epidemic of fake, and expensive, whiplash claims.
The reforms also brought in an Official Injury Claim portal which was meant to speed whiplash compensation payouts up and reduce the need for claimants to use lawyers – although most still do.
Why are mixed injury claims in the spotlight?
The whiplash reforms did not cover payments for any other sort of injury. With payouts for whiplash severely cut, injured drivers began claiming for other ailments that they might have not bothered with when neck injury payouts were higher.
This presented a problem for insurers because non-whiplash injury payouts were not capped, and could therefore be higher.
In January 2023 the Court of Appeal dismissed insurers’ appeals on two test cases, Briggs and Rabot – meaning that those with mixed injuries could claim full compensation for non-whiplash injuries and capped payments for whiplash.
The ABI went to the Supreme Court to appeal that decision, and lost. The trade body had argued that insurers would end up paying higher claims for ‘double counting of injuries’.
An ABI spokesperson said: ‘We’re disappointed by the Supreme Court’s decision to uphold the Court of Appeal’s judgment on the mixed injuries test case. We supported these test cases in the interest of clarity for claimants and defendants alike.’
What does this mean for car insurance premiums?
Stuart Hanley, head of legal practice at Minster Law, said that insurers may already have been factoring losing the Supreme Court into their premium prices.
Hanley said: ‘Given the way the Court of Appeal decision went, you would imagine that insurers were already factoring this into their pricing.’
But insurers may be able to cut premiums now they have certainty from the Supreme Court decision.
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, said: ‘It’s good news that the wheels of justice have moved quickly here.
‘With the judgment affecting hundreds of thousands of people each year, the huge backlog of cases can now start to be cleared and people get the compensation they are due. Moreover, insurers will be able to reserve more accurately and use this to bring average premiums down from their record highs.’
However, insurers say they may have to put premiums up after the Supreme Court ruling.
An ABI spokesperson said: ‘The outcome risks undermining the intention of the whiplash reforms. Motor insurers are doing all they can to keep prices as competitive as possible but this will only increase the cost pressures they’re facing.
‘We’ll work with our members to consider the impact of the judgment alongside the steps we’ve already set out through our 10-point roadmap for tackling motor insurance costs.’
