Car Accident Compensation
Claiming compensation for car accidents has become big business in recent years, with no win no fee lawyers advertising their services in every media outlet available to them. It is hardly surprising then, that more and more people are taking advantage of these deals and are applying for compensation even if they only suffer minor injuries. While this is fine for those who receive the compensation and the lawyers who make money from the process, the cost is being passed back to ordinary motorists in the form of higher motor insurance costs.
In fact the AA has revealed statistics which show that the average insurance premium has increased by more than 11% in 2010 compared to 2009, with the brunt of this being borne by younger drivers.
The Association of British Insurers (ABI) has said that all motorists are paying around £40 a year more on their insurance due to the high cost of compensation for car accidents. Research by the organisation has found that the average payout in a road accident compensation claim for 2010 is £2,430 plus £2,100 in legal fees. They estimate that 10% of all motor insurance premiums are going to the legal profession.
The ABI feel that if the compensation system was faster and made easier to claim then legal fees would be substantially lowered. As Nick Starling from the ABI points out, any system where the fees are more than the compensation given, has to be dysfunctional. The ABI want to see a system where people are fairly compensated for their injuries without huge legal costs.
The Association of Personal Injury Lawyers has responded to this by pointing out that they are campaigning for a new system which will make claims of less than £10,000 more straight forward and will make the claims process more efficient.
Furthermore, a report from Lord Young on Health and Safety legislation released in October 2010 has pointed out that the claims process needs to be overhauled and that the legal industry in this area needs to be more tightly regulated.
With insurance costs going up in all sectors, a compensation system which is both too easy to take advantage of and which supplies lawyers with a steady income stream has to properly investigated and changed.
Only time will tell if any new system or legislation will have any effect on insurance premiums. For the moment the current compensation for car accidents system is causing a major headache for insurance companies and more importantly for their policy holders.
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