Personal injury compensation is the money paid to someone who has been injured to recompensate for the injuries and other damage they have suffered. It is paid by the individual or organisation who is legally responsible for the injuries, or their insurance company.
The amount of compensation paid varies depending on the seriousness of the condition or the injuries caused, and how long it will take for the individual to recover (if at all).
Importantly, there are two types of personal injury compensation:
This is the amount of money that is considered a fair way to compensate you for the pain and suffering caused by your injuries or condition, as a result of someone else’s negligence, along with the general effect it has had on your life. The level of general damages awarded can be as little as a few hundred pounds and as high as millions of pounds in the most serious of cases.
Examples of general damages are:
The purpose of general damages is also to compensate you for the wider impact of the injuries or condition on your life. It is important to know, however, that they will not necessarily cover every aspect of your injuries or condition caused by the accident. Under the legal rule of ‘remoteness’, the defendant will not be held legally responsible for damage which was not reasonably foreseeable.
For instance, if you suffer a broken leg as a result of falling off an unstable scaffold at work, you will be entitled to be compensated (probably by your employer) for your broken leg. You can claim compensation for things such as the pain and suffering caused by your leg injury, and any longer term pain directly linked to the fact of your broken leg.
But suppose that, during your hospital treatment, the doctors decided to insert a metal pin in your leg, but this was performed negligently, causing a range of further problems. This cannot reasonably have been foreseeable as a result of the unstable scaffolding, and so the employer would not be legally liable for the pain and suffering caused by the pin (in this example, a separate medical negligence claim could follow).
Special damages are an important element of personal injury compensation and covers specific financial losses – essentially, your out of pocket expenses. For example, suppose you are knocked off your motorbike and injured. But as well as your injuries, the motorbike requires hundreds of pounds worth of repairs; your motorcycle ‘leathers’ are ripped and need replaced; delays in receiving physiotherapy means you decide to pay for private treatment; and you have also lost 6 weeks’ worth of work as a freelancer.
The purpose of special damages is to compensate you for those additional costs caused – or reasonably expected to occur – as a direct result of the accident.
The usual types of loss for special damages include:
However, there are two things to bear in mind:
This means you cannot decide to replace your standard motorbike leathers with expensive designer gear and expect to have the full cost of the new gear refunded to you – the purpose is to restore you to the position you had been in had the accident not occurred. Some items may need to have some type of valuation before a fair figure can be negotiated, because if the item was old or already damaged, it will not be fair for the defendant to be expected to foot the bill for a brand new one.
Secondly, the financial losses you seek to claim must be reasonably foreseeable. This means if the specific claim for an item or cost is too remote from the incident that caused the injuries, you cannot claim for it.
A lot of different things will be considered when calculating the amount of compensation for general damages. Expert medical evidence is the most important thing to consider when deciding what is a fair sum of money to reflect the pain and suffering caused. If compensation is also being claimed for psychiatric injury, expert psychiatric or psychological reports will also be required.
Your advisers will propose, after discussions with you, a settlement figure to put to the defendant’s lawyers. If negotiations cannot produce a mutually acceptable settlement, your lawyers may need to ask the court to decide, but this should be avoided if possible because it is an expensive and lengthy route to go down.
Not necessarily. Generally, personal injury compensation is not treated by HMRC as taxable income. However, some parts of a compensation pay out may be taxable, for example, if you are self employed you are likely to receive compensation covering your loss of earnings gross (unlike if you were employed). This would be treated as taxable income and you would have to declare it in your tax return. A legal advisor can help you determine whether or not you need specialist advice on taxation issues.
More importantly, the government may clawback some of your compensation if you have been receiving benefits due to your injuries. For example, if you’ve been receiving benefits because you cannot work due to your injury, and you also receive compensation for loss of earnings, you would have been compensated twice. In this case, the amount of benefits you received would be deducted from compensation you received for loss of earnings. It’s a fair process which makes sure you would not be compensated twice for being unable to earn.
Lastly, you may also have to pass on some of the compensation to your legal advisers to cover any legal costs or expenses that are not recovered from the defendant. And if you are being advised and represented under a ‘no win no fee’ agreement, you will have negotiated an agreement to pay a ‘success fee’ representing a proportion of your compensation to your lawyers.
To find out whether you can claim compensation for your injuries or condition – and how much – you can speak to a trained legal advisor for free on 0800 234 6438.
Nicola is a dual qualified journalist and non-practising solicitor. She is a legal journalist, editor and author with more than 20 years' experience writing about the law.
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