The Rising Cost Of Personal Injury Claims

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Personal Injury

There has long been a culture of claiming compensation in the United States of America, and that culture is showing zero signs of easing up. Actually, recent statistics show that the polar opposite is in fact taking place with more and more personal injury claims being made. Whether this is fantastic news, though, completely depends on where you are standing and in which direction you are looking. But we aren’t just talking about the point of view of victim versus insurance company, or even the person being sued, because there are so many other considerations to take into account, just visit Robins Cloud for more information.

Anyway, the very term ‘compensation culture’ implies that there is a huge number of claims for compensation which aren’t necessarily justified, and are in fact ambitious and fraudulent attempts at making money out of something completely accidental. In the past we have heard phrases like ‘crash for cash’, whereby people are deliberately crashing their cars into innocent driver’s in order to start a compensation claim and receive a hefty payout. This is wrong. But the other big problem with this sort of fraudulence is the effect it has on genuine claims. In short, it is becoming harder and harder to determine what claim is real and what is a bogus attempt at quickly pocketing enough money to put down a deposit on several houses.

What’s more, there are more and more areas of a genuine victim’s life that need to be addressed nowadays. When someone is involved in an accident, there are a vast amount of repercussions that need to be taken into consideration. For example, there are the direct injury costs, the cost of medical care, the loss of earnings (both present and future), psychological stress compensation, the possible increase in insurance premiums, and these are just those that can be measured easily.

On top of this, there are other forms of damage that need to be carefully addressed, things like emotional harm and mental disruption, areas of damage that can’t be measured physically. And as such, these areas are becoming more and more exploited because they are easier to fake. All someone has to do is state they need to see a councillor, and then visit once a week for so many weeks and there is nothing a court of law can do to prove they are bogus. But we will get to this a bit later on.

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First, we want to go through some of the landmark cases that has encouraged this compensation culture to spread across the world, not just America.

USA – 1992

This case became world-famous after a woman sued McDonald’s after she bought a cup of coffee from one of their drive-through outlets. What had happened was, after she made the purchase, she tried to remove the lid in which she spilled the entire contents of the coffee onto her lap. She was subjected to extreme scolding and spend eight days in hospital undergoing skin graft operations on her thighs, backside and groin. This was followed by two-years of medical treatments. The grounds on which she won the case was that the coffee served at McDonald’s was far too hot and thus far more likely to cause severe harm that other restaurants. She won an astonishing $2.86 million in compensation.

Australia – 2007

A woman successfully filed a workers’ compensation claim after causing damage to her own face with a lamp during intercourse in a hotel room while away on business. Whilst her employers rejected the claim on the grounds that intercourse was not an ordinary incident of an overnight stay, the court granted her compensation on the grounds that no approval, express or implied response of the woman’s conduct was required and that the company had to deliver the benefits package as they had rented the room.

USA – 2011

A woman was awarded compensation after tripping over her dog while walking to her own garage. The reason this claim was successful was due to her being employed as a decorator by a big home decor company and given she was headed to her garage to collect some sample fabrics, it was deemed her home to be a work environment. Don’t believe us, just look here.

With legal decisions like this setting precedent in courts of law around the world, it is easy to understand why some people wouldn’t try and claim compensation for certain accidents. It also means, governments need to act quickly to establishing new laws that will prevent a queue of similar claims taking place, such as a legal obligation to state that the contents of a coffee cup may be hot.

What does the rise in claims mean for premium prices?

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Whether or not it has anything to do with loopholes or wiggle room, there is absolutely no disputing the fact that the number of claims has increased year on year. Even if you take into consideration the growth in population, the number of claims is still rising rapidly. This has seen something else mimic the rise, and that is the consistency in which insurance companies are raising their premiums. It is a logical step. The more people that claim, the more likely they will have to payout, the more they will have to cover their risks. As such, insurance companies have raised premium costs as a way of ensuring they have enough money in reserve in the case of any personal injury claims that may be awarded.

This is where the divide in perspective has been encouraged. Some believe this is a completely logical and necessary precaution that needed to be taken by the insurance companies, while others blame the rise in our compensation culture on bogus and ambitious claims. However, in order to cast a bit of positive light on those feeling hard done by when it comes to their rising premiums, think of it this way; should you ever need to make a personal injury claim, you are much more likely to be offered a hefty out-of-court settlement. Whether you agree with this cor not, it is how the industry seems to operate at the moment.

Time to address the fake and ambitious claims we touched on earlier.

While there is no questioning the rise of legitimate claims, there has also been a sudden spike in fake claims too. These are essentially little more than audacious attempts to con the system out of paying them undeserved money, and the recent rise has seen government organisation and insurance companies work together in a bit to stop this trend gaining any more traction. It is worth noting, though, that whilst terms like ‘crash for cash’ have become common terms, the actual figures churned up through detailed research suggest that the rise in fake claims hasn’t been as substantial as hearsay, gossip and the media would have you believe. This means that most of the compensation paid out to victims is done so legally and in spirit of what they truly deserve.

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So why the growth in compensation claims?

As with most things in life, we can only offer well-thought out but speculative theories. However, the most dominant of those theories, which accounts for the most substantial reason for growth is to do with introduction of new laws. We now live in a society that is dictated by rules and regulations, and the room to play is not like it was a couple of decades ago. Everything needs to come with a warning, whether that be a do not eat sticker or a not suitable for under 6 sign. In short, our lives are dictated by health and safety regulations. They have just become stricter and stricter with each passing year. The standards have been increased and tightened. But while this was intended to reduce injury, it has had an adverse effect when it comes to injury claims, and that is because employers now have a legal responsibility to protect their employees right across the board and in almost every aspects of their lives. As we all know, though, accidents happen. It does not matter how many precautions you take or how many stickers you cover the windows with or how much training you give out each month; accidents happen. By it’s very definition, an accident is something that happens unintentionally and unexpectedly, yet by enforcing more and more rules we have provided victims with better grounds to sue on.

It is easier to make a claim against an employer than ever before; it is as simple as that. But if that was enough substance to answer the question of why the rise, well, the majority of all personal injury claims are made up of work related accidents or injuries. Put two and two together and we have a rise in compensation claims and a rise in the costs associated with them.

Another spike that has been noted by industry researches has to do with our roads. They have become busier. There are more cars and more cars means a greater chance of accidents and the more accidents the more claims. The biggest of these are whiplash claims, and that is because whiplash is caused by unexpected jolt involving your neck and back. More payouts for whiplash, the more the premiums go up. It is simple math.

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Student @ Advanced Digital Sciences Center, Singapore. Travelled to 30+ countries, passion for basketball.