Personal Injury Law: the value of insurance in the pursuit of compensation

If a new client approaches me for advice on a personal injury claim, once we have established that there is a reasonable claim to advance, one of the first factors I have to discuss is how my client is going to fund his claim. There are various insurance options open to Claimants – and a "before" or "after the event" insurance policy might be the answer to the funding question if there is no existing cover already in place.

I am frequently asked by potential new clients whether a claim might be advanced under a "no win, no fee" agreement (to use the official terminology, a Conditional Fee Agreement). The "no win, no fee" description can be somewhat misleading since it is often misinterpreted as "if I don’t succeed with my claim, I don’t have to pay anything". Unfortunately, this is not the case.

Why do you need cover?

Certainly, under a "no win, no fee" agreement a Claimant might avoid paying his own solicitor's costs if the claim is unsuccessful. But there are other costs, known as "disbursements", which have to be funded as the claim progresses. For example, in order to advance a personal injury claim, a Claimant must prove to the Court what injuries have been sustained and this is done by obtaining a medical report from an appropriately qualified expert. Under the Civil Procedure Rules any medical expert who is instructed must review and comment upon a Claimant's medical records when completing the report. Hospitals and GPs are entitled to charge up to £50 for access to medical records and depending on the type of expert instructed, a medical expert might charge anything from a couple of hundred pounds (for an orthopaedic report) to more than a thousand pounds (for a psychiatric report). Somebody has to pay for those reports. Very often those costs fall upon the Claimant personally which is why having an insurance policy is so important.

Do you have cover already?

Where an existing insurance policy exists, the insurance is known as "before the event" insurance and the presumption is that the policyholder will use that policy instead of effecting the alternative, "after the event" policy. Insurance purchased after an accident has occurred is often effected alongside a Conditional Fee Agreement and protects the Claimant against those costs incurred should he lose his case or face a costs penalty sanctioned by the court.

As a Claimant you might – perhaps unknowingly - have legal expenses insurance attached to an existing policy, usually as an additional benefit under a household policy. You are under a duty to check to see if you do have before the event insurance. If you do, whilst the insurer might direct the Claimant to one of its nominated panel firms (very often miles away from where the Claimant lives) but ultimately the policyholder is entitled, at least in principle, to instruct a lawyer of his own choice. Provided the lawyer confirms he will adhere to the terms of the insurance policy, and will report faithfully on whether or not the claim is viable and remains viable if court proceedings have to be issued, generally authority will be given to proceed.