How Personal Injury Compensation is Calculated

New Rules for Whiplash Claims for Accident on or After 31^st May 2021

From 31^st May 2021, the law will change in respect of making a claim after a road traffic accident. If you suffer a whiplash injury, then it is unlikely that we will be able to recover any legal fees. Further, the value of the whiplash claim will be reduced and fall within a fixed tariff scheme.

What is Whiplash?

For accidents on or after 31^st May 2021, the law will define whiplash injuries as any soft tissue injury to the neck, back, or shoulder.

Tariff Based Damages

The government will fix the value of the claim for whiplash based upon a fixed tariff system. The damages will be fixed as follows:-

Duration of injury	Amount
Not more than 3 months	£240
More than 3 months, but not more than 6 months	£495
More than 6 months, but not more than 9 months	£840
More than 9 months, but not more than 12 months	£1,320
More than 12 months, but not more than 15 months	£2,040
More than 15 months, but not more than 18 months	£3,005
More than 18 months, but not more than 24 months	£4,215

Exceptional Cases

A client can request an uplift in exceptional circumstances. The procedure is that the claimant can advise at the outset, and to the medical expert, that they feel they are entitled to a 20% uplift on the tariff because of some exceptional circumstances.

The criteria for exceptional circumstances is unclear, but it could include a lengthy period of treatment, a ruined holiday, lengthy period off work.

If you read through our case studies you’ll see that different claimants receive different amounts of compensation. This isn’t much of a surprise, but what you might not know is exactly how these different amounts are figured out. Compensation is calculated by totting up something called heads of claim. To understand the process first you need to understand what the actual purpose of compensation is. What is the theory behind awarding it?

What Compensation is Meant to Do:

Compensation is meant to function to put the claimant back in to the position a claimant would have been in but for the accident, i.e. to try and compensate for the losses.

Is Compensation always Monetary?

Ultimately, except in very rare cases, the court can only award monetary compensation that it considers best reflects the type and extent of loss in a given case.

Heads of Loss (heads of claim)

Identifying the amount of compensation to be claimed in a personal injury case can be very complicated. Courts use something called heads of loss or heads of claim to pinpoint how much damage has been done which influences the amount of compensation a claimant will receive.

To bring consistency to compensation awarded for cases which will always be unique, courts and lawyers identify common types of loss these become heads of loss; lawyers will assess the value of claim by referring to individual heads of loss.

These are refered to as heads of loss and lawyers will assess the value of claim by referring to individual heads of loss.

Some cases might involve only 1 head of loss, like the pain and suffering caused by a broken wrist. Others involve several heads of loss, for example when the broken wrist prevents work, leads to unemployment, mental illness, marital breakdown and on and on. In every case, before trial or before settlement, it is necessary for the claimant to consider with an expert lawyer what the potential heads of loss are.

Below are some of the more common heads of loss that may be considered in typical accident claims. Additional or alternative claims may arise if the injury is fatal.

Although some heads of loss cannot be assessed in anything other than an impressionistic way, the modern approach is to strive for reasonable accuracy, even to the extent of using forensic accountants and actuaries to assess potentially substantial losses.

General Damages and Special Damages

You may have heard reference to General Damages and Special Damages. General damages are awarded for non-pecuniary (non-monetary) loss, such as for pain and suffering.

Special damages in contrast are for losses usually measured in pecuniary (monetary) terms, such as the cost of medical treatment.

Some of the heads of loss below, in terms of general damages in particular, may well overlap but because of the particular impact of injury in a given case, separate heads of loss are sometimes identified.

In practice, claimants may attempt to separate out particular consequences with a view to obtaining greater recognition and a larger award; and defendants may attempt to argue there is only one head of loss (e.g. PSLA) and point out the court should not give a larger award as might it overcompensate. Which approach is appropriate is a matter for judgment.

Pain and Suffering and Loss of Amenity (PSLA)

This head of loss, PSLA, is the usual starting point and will be present in any case unless there has been immediate loss of life or the victim is comatose. It is assessed in an impressionistic and, in part at least, subjective way in so far as one is trying to put a monetary value on an intangible experience, unique to an individual, that is not usually measured in money terms.

It can be broken down into different parts.

Pain is the physical pain suffered and caused by the accident.
Suffering is the mental part – the anxiety, distress, embarrassment etc.
Loss of amenity is the loss of ability to enjoy life through the use of the senses, such as loss of sight, loss of use of the legs preventing the enjoyment of a walk, or loss of enjoyment of an active sex life.

In practice, it is very rare to separate awards to be made in respect of each constituent part and particular suffering or absence of one part is more likely to lead to an increased or decreased award.

In assessing the value, the court will have reference to the Judicial College Guidelines for the Assessment of General Damages in Personal Injury Cases and to previously decided cases. Every claimant is different so these are only guideline materials and particular consideration must be given to the unique facts of every claim.

For example, one particular fact to consider, among many matters, is the age and life expectancy of the claimant: the award for a 20-year old who has to live for decades with the consequences of injury is likely to be significantly greater than the award for similar injuries to a 65-year old. The appropriate figure will range from a few hundred pounds only for very minor injury to over £300,000 for the most serious injuries such as tetraplegia or very severe brain damage.

Loss of Marriage Prospects or Divorce

Sometimes, as in the case of a grossly disfiguring facial injury, the court might be prepared to identify the loss of chances of marrying as a separate head of loss rather than part of PSLA. In practice, this is highly likely to be assessed as part of PSLA. Regrettably, an injury may also be the cause of a marriage breaking down. Again, this may be included as part of the PSLA award.

Ruined Holidays or Missed Opportunities

An injury may cause a holiday or opportunity to be lost completely (and monetary loss may also occur) but sometimes the holiday is taken anyway or the injury happens whilst on holiday. Distress and inconvenience may be substantial. The courts frequently make a separate award of general damages, from a few hundred pounds, running to several thousand pounds or more where an expensive honeymoon has been ruined or a once-in-a-lifetime event has been missed such as the opportunity to compete in the Olympics.

Loss of Earnings

Calculating the impact of an injury upon the ability to earn an income can be one of the most straightforward or complicated assessments to make. It is also often

one the most important heads of loss in monetary value.

Generally, this is a head of ‘special damages’. The court looks to see how much the claimant would have earned, after tax and national insurance and other overheads, but for the accident. In the case of an employee on a regular weekly wage, the weekly loss can be calculated very accurately and multiplied by the number of weeks out of work due to the accident.

For the self-employed, there may be evidence from business accounts and bank accounts to look at as the court tries to evaluate how much business and net income has in fact been lost. If income has been in cash, establishing the extent of loss may be difficult and one has to look at circumstantial evidence.

Whether looking at past or future loss of opportunity to earn, the court will have to assess the likelihood of such earning but for the accident. The unemployed man who says I had a job all lined up the next week… may well have a claim if he can prove his story even though he was unemployed at the time of the accident.

The woman on a regular salary with a stable secure job may have a readily provable claim for loss of earnings continuing up until her planned retirement in 30 years’ time if she can no longer work again.

Or in another case, the claimant may, as a result of the accident, lose the ability to carry out higher paid employment and so have a reduced earning capacity for the foreseeable future. The possible variations are endless.

Smith v Manchester award

Technically, loss of earnings may also come under the description of general damages. This will be the case for an award for the increased risk of unemployment (and financial loss) as a result of disadvantage due to the injuries in the event of being cast onto the labour market. The award may reflect a few months or as much as 3 years’ loss of earnings, depending principally upon the nature of the risk, the extent of disadvantage, and the working life of the claimant.

Job Benefits Loss

Some jobs come with perks, such as childcare, a car, private medical insurance or even free plane travel. Compensation is payable if these are lost in the same way as loss of income.

Pension Loss

A claimant is entitled to compensation for loss of pension caused by the accident. The loss may occur because work has been prevented or because earnings have been reduced and consequently there have been lower pension contributions. This is frequently a complicated calculation and expert evidence may be required to assist.

Congenial Employment

An award may be made if the claimant has had to give up employment that was particularly enjoyable and rewarding in terms of satisfaction or status. Traditionally this was more often considered relating to status jobs such as being part of the emergency services but there is no principled reason why an award might not apply to any particular job involving expertise and training.

Ability to do DIY, Gardening, Car Maintenance etc.

Sometimes taken for granted until accident strikes, a man or woman’s contribution to domestic tasks such as DIY, gardening, car maintenance, and so on can be recognised as very valuable. The court may be asked to assess not just the past loss but also continuing losses into the future, tempered only by the likely diminishing effects of age as would in due course have stopped such activities.

The extent of loss will vary depending upon how keen or expert the injured person was. The way in which it is measured will depend upon whether replacement services have had to be paid for (in which case records such receipts are invaluable as evidence) or will be paid for in the future or whether family and friends provide replacement services gratuitously.

In many typical cases, such heads of loss may be put at as much as £1500 a year and continuing beyond working retirement age.

Care and Services

If a claimant requires paid care as a result of the accident then compensation will be payable for the costs of the care, whether in the past or extending to the future. If that care is provided by family and friends gratuitously, compensation may be recovered to be held on trust for payment to the carer(s) although the award will usually be of a net figure after notional tax and national insurance are taken off the notional costs. If the carer, such as a spouse, has had to give up paid work to carry out the caring, the loss of earnings may provide the basis for calculation.

In very serious cases, this head of loss may be one of the greatest and expert evidence will almost certainly be required as to the extent of care needed and the costs involved.

Similar principles apply to the loss of ability to do household tasks such as shopping, ironing, cooking such as where typically a spouse or family member or friend has had to taken on this extra work, providing services beyond those usually given.

Medical Expenses

Most people are very proud of our National Health Service but private treatment is sometimes wanted, whether perhaps for speed, reasonable convenience or because particular treatment is not otherwise available.

The general rule is that the claimant can choose, if he or she wishes, to seek private treatment reasonably required as a result of the injury and the reasonable costs of such treatment can be recovered from the defendant. This applies even if there has been little or no private treatment in the past.

Aids, Appliances, Prosthetics and Accommodation

Closely linked to claims for care and services, the impact of injury can be greatly reduced by the appropriate provision of equipment, ranging from purchase of a walking stick or bath rail to purchase of wheelchairs or installation of an entire new bathroom.

The extent to which physical needs can be addressed may extend to requiring 24-hour care at home or in a residential setting or moving house entirely. Such expenses may have been incurred before any trial or settlement or they may be expected to arise many years later. Frequently, expert evidence will be essential.

Travel and Automatic Cars

Usually, there will some additional travelling costs following from any significant accident. Additional costs of attending for treatment to a local GP on a couple of occasions might well be ignored by most claimants but where attendance is frequently required at hospitals some distance from home, the costs add up.

The calculation may be done by pence per mile or the cost of any taxi fares or perhaps claiming an award for gratuitous services by friends and family.

Usually, this head of loss will be in the past but it can extend to the future, such as where a new place of employment is required at some distance further away (so long as the same loss is not sought twice by claiming as a loss of net earnings as well).

Second, there may be ongoing costs such as having to purchase an automatic car because a clutch and gear stick can no longer be operated safely. If an automatic car is more expensive to buy and run, the costs over many years can run into thousands of pounds.

Miscellaneous losses

Following an accident, there may some specific heads of loss such as immediate damage to a vehicle, loss of an insurance excess or damage to or destruction of clothing etc. Each of these is properly claimed.

Novel claims

The above list is not exhaustive. If you are a claimant, you may have some quite unusual or even unique heads of loss that should be claimed – and because the lives we live are unique and often varied, the list of heads of loss is never closed