Aviva calls for whiplash 'easy money' to end

Abolishing whiplash pay-outs could cut your car insurance by £50


Car stock

Your car insurance premium could fall by up to £50 a year if whiplash payments were banned. So claims insurer Aviva which says a ban would save £900m a year.

It could also help put an end to an ambulance-chasing culture that increasingly costs all motorists though higher premiums. How legitimate are Aviva's claims?

Easy cash

First, AOL Money asked the AA for their opinion. "Aviva pretty much reflects our view," said AA spokesman Ian Crowder. "A lot of people are exploiting the opportunity to earn a few pounds by exaggerated or non-existent claims."

Crowder says the AA rejects around 12 whiplash claims a week. Rather than play the system, Crowder says "most genuine claimants just want to get better".

Whiplash cash pay-outs can be has high as £3,000 - sometimes more. But the lure of cash payouts have also attracted some oppotunistic legal firms, sometimes referred to as 'ambulance chasers'. It's also not easy to diagnose soft tissue injuries using scans or X-rays says Crowder, hence the free-for-all.

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Legal vultures

The Association of British Insurers says there are 475,000 whiplash claims a year. And those claims put almost £100 on the average annual car insurance premium. For example, for every £1 Aviva pays out in personal injury compensation, another 77p in legal fees goes to lawyers.

"Motor insurance premiums are at the heart of the focus on the cost of living," says Aviva boss Maurice Tulloch. "If the UK is serious about reducing the cost of motor insurance for the long term, then it is clear we have to address the way we compensate minor whiplash, using rehabilitation only to treat genuine, minor injuries."

Text pests

Aviva wants the Ministry of Justice to up the small claims track limit to £5,000 from the current £1,000, which it has remained at since 1999. This would mean legal costs for claims below £5,000 would not be recoverable by a lawyer, which would save an estimated £11 on the average premium Aviva claims.

It also wants to ban referral fees and curb text pests. Aviva says referral fees – paid in exchange for details about accidents so garages and hire car operators can pick up billable work - should be banned. Doing so would save around £7 on the average policy.

These moves could also cut unsolicited text messages and phone calls encouraging claims.

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Should you accept?

Even if you are offered compensation as a result of an accident, Which? has warned against accepting a cash offer from an insurer - in some cases.

"You might actually have a lasting medical problem, as the injury you suffer could be whiplash, perhaps even intensifying an existing condition such as osteoporosis," Which? has said.

"In these cases, the long-term effects of the collision could be severe and you could be entitled to more compensation."

By accepting a cheque, you may also be obliged to sign a waiver for any further claims for medical compensation.

What do you think? Should whiplash payouts be scrapped? Or is the occasional fraudulent case a small price to pay to ensure people are compensated for their injury? Let us know in the comments section below.

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