Injury claims pushing up premiums image

LEGAL costs associated with settling personal injury claims are pushing up the average car insurance policy by £40, according to the Association of British Insurers.

Motorists can expect to pay at least £40 extra on their annual premiums because of the culture of claims, and the ABI is calling for an overhaul of the system to make it more efficient.

The association analysed more than 50,000 low-value road accident personal injury claims, and found that settling the average injury claim of £3,430 costs an extra £2,100 in legal fees.

Nick Starling, ABI’s Director of General Insurance and Health said: “The activities of some claims management companies in racking up high legal costs adds to the cost pressures that end up being paid for by motorists through higher premiums.

“We need a simpler, faster, more cost-effective compensation system that gives claimants a much better deal. Reducing excessive legal costs is essential to achieving this.”

Lord Justice Jackson’s review of civil litigation last week called for a percentage cap on the success fees under conditional fee arrangements.

The AA also cited an increase in personal injury claims as a reason for premiums rising this year in their Insurance Premium Index for the third quarter of the year.

Simon Douglas, Director of AA Insurance, said: “A proliferation of personal-injury claim lawyers has also led to the number of injury claims across the board sharply increase, while fraud has eaten into insurers’ costs to the extent that over the past year, for every £100 taken in premiums, £123 has been paid out in claims.”

With motorists’ premiums rising through factors beyond their control, drivers may be looking at ways to off-set the increased cost.

Adding another; more experienced driver as a named driver on the policy can have an effective on car insurance premiums, and using price comparison websites like Compare the Market and MoneySupermarket allow users to review their quotes to see if adding another driver makes a difference at all.

Increasing the amount of voluntary excess you are willing to pay in the event of a claim could lower your premium, but you should understand that this sum is not hypothetical – and you will have to pay out before your insurer will pay out.

Of course driving in a responsible and conscientious manner will make sure you don’t receive any points or fine for traffic offences, and will make you less likely to be involved in an accident. If you are involved in an accident, or you receive a fine for speeding though – you must declare it to your insurer, because if they were to find out about it; in the event of a claim, they may refuse to pay out.