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Car insurance premiums expected to fall by up to £35/yr as whiplash reforms take force

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Drivers could save up to £35 a year on their car insurance, the Ministry of Justice has said, as major reforms to the claims process for whiplash injury come into effect this week. The shake-up includes a new online portal for road traffic injury claims, while whiplash cases can no longer be settled without medical evidence. 

There were more than 550,000 whiplash claims in 2019/20 alone – a figure the Ministry of Justice has called "unacceptably high". But it believes the new reforms will reduce the number of claims, which in turn should allow insurers to cut premiums for millions of drivers. The Ministry of Justice says insurers have pledged to pass on savings worth a total of £1.2 billion to drivers.

See our Cheap Car Insurance guide for tips on how to cut costs now.

A new online claims portal is among the changes introduced this week

The key changes, which were introduced on Monday 31 May, include:

  • The launch of a new online claims portal for any road traffic related personal injury claim valued at under £5,000. This includes claims for whiplash. The idea behind the portal, which is run by the Motor Insurers' Bureau and is free to use, is to allow victims to try to settle their claims without the use of a lawyer and without having to go to court. The Ministry of Justice expects the majority of road traffic accident claims to go through the portal in future.

    Guides have been made available to help explain how to make and progress a claim, while those who need further assistance can call the official helpline on 0800 118 1631. You can also call if you don't have access to the internet and so you can't use the online portal. Note that neither the helpline or guides provide any legal advice though.

  • Increasing the small claims limit for road traffic accident related personal injury claims from £1,000 to £5,000. Where claims can't be settled via the online portal, court action will be needed. As with other civil claims, the case will be allocated to one of three routes by a judge, depending on the value of the claim and how complicated the case is: small claims, fast track or multi-track.

    Before 31 May 2021, any road traffic accident related personal injury claim with a value over £1,000 would generally be assigned to the fast track route, which is longer and more complex. But now, with the higher limit in place, most cases of this type will go via the small claims route instead.

    The downside is that if you win, you won't be entitled to recover most of your legal costs from the other side  as you would be able to do with the fast track route. If you lose, you won't usually have to pay the other party's lawyer's fees but you may still have to pay certain other expenses of theirs (eg, up to £95/day for loss of earnings or leave to attend a hearing).

  • The introduction of a new fixed tariff of compensation for whiplash injuries. This sets out how much can generally be claimed for an injury lasting up to two years. The amount varies depending on the duration of the injury. For example, for an injury lasting up to three months, the total amount payable is set at £240, while for an injury lasting a year and a half you could claim £3,005. In each case, the amount can be raised by a court in certain very limited circumstances, for example where the injury was 'exceptionally severe'.

    The Ministry of Justice says the new tariffs give claimants "clarity, predictability, and certainty" about how much their claim will be worth, while ensuring costs are controlled and that compensation is proportionate to the injury suffered. 

  • The introduction of a ban on the practice of seeking or offering to settle whiplash claims without medical evidence. Until 31 May 2021, claims could be settled without medical evidence. But this will now be required going forward – the portal will help claimants arrange an appointment with a medical expert who will produce a report to be used in the whiplash claim.

    Initial medical reports will cost £180 + VAT but, if you're making a claim without the help of a lawyer, this will be paid for by the insurance company covering the driver that you feel was responsible for the injury.

What does the Government say?

Lord chancellor, Robert Buckland QC MP, said: "For too long the system for making whiplash claims has been open to abuse by individuals looking for an easy payday – with ordinary motorists paying the price. Our changes will put an end to this greedy opportunism and ultimately see savings put back into the pockets of the country's drivers."

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