While the vast majority of personal injury claims are settled out of court there are still many which pass through the judicial system. This is a system which has been in place for many years now and while no two injuries are ever the same there is extensive guidance on calculating compensation. Many people enter the legal system looking for personal injury compensation without actually knowing what to expect. So, how are different types of personal injury claims considered?
Two Basic Categories
There are two basic categories when it comes to personal injury compensation which is pain and suffering and past/ future losses and expenses. Pain and suffering is also known as general damages whereas past/ future losses and expenses are also known as special damages.
Pain And Suffering
Compensation payments for pain and suffering are the most common and are based upon the type of injuries sustained and any long-term symptoms/ conditions. It is also worth noting at this point that compensation claims will be considered for both physical and psychological injuries. There obviously needs to be a strong case for negligence by a third party but if this is proven then it does potentially open up a number of different options.
While psychological claims may be the most difficult to prove there are ways and means of clarifying the situation via the medical profession. We have seen instances where personal injuries, as a result of negligence by a third party, have changed the character of an individual and left major psychological scars leading to substantial payouts.
Losses And Expenses
Aside from compensation paid due to pain and suffering it is possible in many situations to claim for actual losses in income and expenses incurred. Historic losses in income and expenses are relatively easy to calculate as part of a compensation claim but it can be a little more tricky calculating future losses in income and expenses. However, if an individual can justify a compensation claim for future earnings and expenses with cold hard facts, and reasonable assumptions, this would be considered on merit by the courts
Medical Advice
Any personal injury claim will obviously be based upon sound medical advice and no guidance on potential compensation amounts will be offered until this has been received by the courts. This guidance will relate to not only historic losses of income and expenses but also any potential compensation payments going forward. While historically some medical advice for the courts has been seen as “claimant friendly” the system is now much tighter and it is not as easy to hoodwink the medical profession as perhaps it has been in years gone by.
Other Factors To Take Into Consideration
There are many factors to take into consideration when it comes to personal injury compensation some of which may seem unfair on particular parties.
Age And Gender
Rightly or wrongly a female would likely receive a higher compensation payment than a male where both have received facial scars as a result of negligence by a third party. The situation can be even more diverse if for example the female was an aspiring or established model. This could potentially take compensation levels to a whole different league.
It is also worth noting where there is a requirement for long-term medical care, as a result of negligence, the total medical expenses will be significantly greater for a relatively young individual than one in their later years – the longer you live the larger your medical expenses, simple.
Pre-existing Medical Conditions
Where there are pre-existing medical conditions which may have some impact upon personal injuries received as a result of negligence by a third party, these will be taken into consideration. That is not to say that no compensation will be received but everything will be taken into consideration before a payment is agreed.
Ogden Rate
The Ogden rate has been in the news of late with the government announcing a major overhaul of this very important element of the personal injury claims sector. This is used to calculate the discounted rate for compensation payouts using expected returns going forward. The UK government recently reduced the rate from 2.5% to -0.75% which will cost the insurance industry hundreds of millions of pounds a year. Well, when we say insurance industry, we mean clients in the shape of long-term premium increases.
Recent changes to the Ogden rate have been the subject of much discussion and the UK government was expected to release an update last week to clarify the situation. Amid speculation that the reduction in the Ogden rate could be reduced (rumours continue to swirl around the markets) so far there has been no announcement from the UK authorities. Many insurance company shareholders will be nervously watching for the rate announcement because it does have a massive impact upon compensation claims which involve long-term medical care.
Compensation Payments
As we mentioned above, no two cases are ever the same but generally personal injury compensation will be paid in a lump sum. This is known as payment of damages on a “full and final basis” and effectively closes the case for insurance companies. In some instances, where there may be complicated factors to take into consideration, a provisional damages payment can be awarded ahead of a further award further down the line. This will ensure that the successful claimant is not out of pocket in the short term while the long-term figure is calculated.
Covering Future Costs
As far as the insurance companies and the courts are concerned, once a “full and final basis” payment has been made then it is up to the individual/ individuals to look after their own financial affairs. They will be paid enough to cover past and historic expenses/ loss in earnings so they will need to keep tight control of outgoing payments. If for example a successful claimant was to spend part or all of a compensation settlement on other things, leaving a shortfall going forward, there is no legal redress and it is up to the claimant to cover any shortfall.
Where individuals would rather this responsibility was taken out of their hands, or an individual was not able to manage their own affairs, there are solicitors who will offer a trust type service to ensure sufficient funds are available to cover future expenses. While there will obviously be a charge for the trustees to carry out their roles, for many people this type of arrangement is a godsend.
Conclusion
On the surface it is easy to assume it is just a case of ticking boxes, adding up the elements of a compensation claim and instructing insurance companies to pay out. It is not that easy and because no two claims will ever be the same, taking into account injuries, age, gender, level of negligence, it is not as straightforward as you might assume. Claiming for both physical and psychological injuries is more commonplace today than ever before but claimants still require medical evidence and a detailed report showing how they arrived at their compensation claim figure.
This is why the Ogden rate is so important for the insurance industry because a move from 2.5% down to -0.75% effectively means a significantly greater payment would be awarded where long-term financial assistance is required. We will soon see whether lobbying by the insurance industry has been successful in persuading the UK government to revisit what is a massive change in the Ogden rate.
