By shunning legal representation, you could get more compensation for injuries, and you could settle your personal injury and motor accident claims three months earlier.
Many parties get involved when you make an insurance claim. There's you and the other party, there are third parties, your insurers, the other party's insurers, and possibly a repairing garage and medical specialists. One or both insurers may appoint a claims management company and they, or the insurers, may appoint lawyers. Or you may seek legal representation yourself. Considering the number of parties involved, it doesn't sound like much fun!
It does goes some way to explaining why insurance is so expensive though, as all these costs are borne by our premiums. You might not be able to do a great deal about this, but you can often remove at least one party from the equation: your lawyer.
Many people assume that legal representation can only be a good thing, especially if it's already paid for with legal cover. However, the Association of British Insurers (ABI) disagrees. It says that motor insurance claims without legal representation are settled on average 90 days faster.
It also says that for personal injury claims of £1,000 to £25,000 claimants without legal representation receive on average £289 more and their claims are settled 95 days more quickly. The ABI is using these statistics as a basis for calling to reform the personal injury compensation system.
We need to take the ABI's statistics with a pinch of salt though. Firstly, for some reason they've limited their personal injury statistics to a narrow range: £1,000 to £25,000. Secondly, motor insurance claims settled without legal representation are bound to be settled faster, as on average the cases going to lawyers will be more complex. (Although having worked on both the insurance and legal side, I know about the stupid delays that can take place too.) Finally, the ABI doesn't say whether motor insurance claims with legal representation are settled for less money on average.
We could argue that the ABI's presentation of the statistics is self-serving, as less involvement from lawyers will make claims less costly for the insurers it represents. However, from my experience, it's when the legal and insurance industries meet that claims often get turned into a pig's breakfast, and costs spiral out of proportion. I believe this tangled mess of two giant industries is one of the major factors that pushes up our insurance premiums, so the ABI has a point.
The government has called for reforms to the whole claims management industry, which, in the light of the ABI's research, should be given serious consideration. In the meantime, whilst we wait for this government or the next to mess that one up (he said cynically), here are some tips:
- Legal representation may be useful, but don't just rush in.
- Try to get free legal cover with your motor insurance. If it's going to cost you £289 in lost compensation, you shouldn't have to pay for it as well! Read more in Stop Paying For These Five Insurances.
- For small, non-motor accident personal-injury claims, consider negotiating a settlement direct with the other party or its insurers.
- For small motor accident claims with or without injury, consider negotiating with the other insurer direct, or ask your broker to give it a go. You could also speak with Citizens' Advice to see what guidance they can offer.
- Be wary of ambulance chasers and adverts promising to get you masses of cash compensation. If you feel you're being pushed into making a spurious claim that you wouldn't normally make, walk away, or you may actually end up out of pocket or, worst case, even financially ruined.
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