Damages: an Overview
Compensation
The remedy that a person obtains for the personal injuries, loss and expenses incurred as a result of an accident or illness are known as Damages, more commonly known as Compensation.
Damages fall under two broad headings, General and Special Damages and there are various ways that you may come to receive damages during the course of your claim.
General Damages
General Damages are compensation for the pain, suffering and loss of amenity arising out of the injuries. The most significant component in the majority of cases is going to be the loss of amenity, i.e. the inability to work, play and enjoy the pleasures of life. The longer the loss of amenity lasts the higher the award.
Assessing the pain of the injury, the suffering which follows and the loss of amenity in monetary terms may seem an unreal exercise. However, this is what the court do, considering previously reported court cases, to determine the level of the award.
Awards for General Damages are rarely high and are frequently dwarfed by Special Damages
Special Damages
Special Damages are compensation for financial losses arising from the accident or illness. They will consist of losses or expenses incurred, for example, wages, travel, medical expenses, care, DIY, gardening, loss of holiday and pension loss.
What you can claim for:
- Earnings lost by absence from work: It is common for your employer to pay statutory sick pay when you are absent from work. Your employer may have their own sick pay scheme, which provides additional support during illness. However, such payment schemes vary and do not continue indefinitely. Therefore, when there is a difference between wages you should have earned but for the accident and the amount you have received, then this difference may be claimed from the party responsible for the injury. Loss of earnings is claimed net, that is after deduction for tax and national insurance.
- Prescriptions are likely to be given following serious injury and the cost of these can be claimed. If it is likely that medication will be required over an extended period then it may be cheaper to purchase a pre payment ticket. This often works out more cost effective, rather than paying for individual prescriptions. They can be bought quarterly or annually and are available for purchase through a chemist or online at: www.ppa.org.uk.
- Private health care: If treatment for injuries is under private health care it is possible the health care provider will wish to claim the cost of such treatment given to you, from the person responsible for your injuries. Therefore, if you have received treatment from a private medical company, seek details of those expenses so they may be included in your claim. In fact it is customary for a condition in your private healthcare insurance to require you to claim these costs.
- Vehicle repair costs or replacement cost can be claimed. If this is covered by your own insurance then the claim is likely to be limited to excess on that policy. Clothing may also have been lost or damaged, either in the accident or when the emergency services attended.
- Holidays: If a holiday has to be cancelled due to continuing symptoms these costs may be pursued with any other expenses incurred due to the accident. Such costs include travel to your GP and treating consultant. If public transport is used then a record of journeys taken should be recorded and receipts retained to prove the expenditure. This is important in respect of all expenses.
- Time spent by relatives giving care is an item of claim although not automatically considered as a loss. You are not required to enter into a fee paying agreement with your family to recover compensation but simply to record the time spent by family members (and others) providing nursing services and detail the care provided.
- Long term incapacity may inhibit you from undertaking household chores, gardening or DIY. If a contractor is engaged to carry out these services, when you would ordinarily have carried out such tasks, then the commercial cost, less the cost of materials, can be claimed.
- Funeral costs: In fatal accidents the cost of the funeral is a valid claim
How Your Compensation is Paid
When it comes to the court making an award or, in most cases, reaching an out of court agreement with the other side, the payment will be made in one lump sum. However, in some circumstances, where losses will continue into the future, the individual may want periodical payments. The benefit of having periodical payments is that annual payments continue for life, compared with a lump sum payment, where the court has to guess as to how long the Claimant will live.
If there is doubt about the long terms effects of an injury, a provisional award may be appropriate. In such circumstances a lump sum award will be made, but the Claimant (the injured person) will be entitled to seek additional damages if a specified illness or disease is suffered at a later date.
Where the injury is a serious one and doctors consider it will be some years before recovery is seen, it may be possible to receive some compensation (an interim payment) during the case, rather than waiting until the end when the lump sum will be awarded. Therefore, interim payments can be sought to cover lost earnings and, for example, payment of medical treatment, when undertaken on a private basis.
Investing Your Compensation
When compensation is received, consideration should be given to investing the award, to maximise the return on the damages. We are able to provide independent financial advice on investments.
Additionally, a large award of damages may mean that an individual will no longer be able to claim welfare benefits, which are means tested. However, there is a way round this problem. A personal injury trust can be set up, which is a legitimate way of ensuring that notwithstanding a large award of money, means tested welfare benefits can still be claimed.
A personal injury trust (PI Trust) is legally binding arrangement in which Trustees hold an award of damages for the benefit of the injured person. The purpose of a PI Trust is to protect the damages award from means tested benefits. The regulations allow you to discount an award of damages which is held in such a trust for the purpose of calculating means tested benefits.
There are essentially three types of trust that could be used for a damages award. The choice will depend upon various factors including the value of the award, tax, your long term needs and the protection you require.
- Bare Trust: This is the simplest form of trust. The Trustees will hold your award absolutely for you and you alone. Therefore, it is not possible to name anyone else a beneficiary.
You can ask the trustees to transfer assets to you at any time and they cannot refuse to do so unless they consider that the particular use that you wish to make of the money is inappropriate. It would be possible for you to “bust the trust” by demanding that the money is paid out to you in full although you would have to consider whether that is appropriate especially if you are concerned about protecting the assets from means tested benefits. It is not possible for you to be the only trustee because that would mean that there is no trust, but you can act alongside other Trustees.
- Life Interest Trust: In this case the money is held by trustees for your benefit during your lifetime. This means that you are entitled to receive the income and then after your death, other beneficiaries will receive the capital. This is a simplification of what can occur, because the trustees may have the power to pay capital to you or to other beneficiaries during your lifetime depending upon the terms of the trust.
If income is paid to you then this would have to be declared on any financial assessment for means-tested benefits.
You may wish to provide a “policy statement” setting out the circumstances in which you would wish payments to be made from the Trust, such as for annual holidays for yourself and your carer.
- Discretionary Trust: In this type of trust, no one beneficiary named in the Trust has any right to receive anything; it is a matter for the Trustees to decide how funds are distributed. You would therefore have to name more than one beneficiary.
In most cases, such trusts are set to run for up to 125 years although many come to an end much sooner. This type of trust provides the most protection but is likely to involve more administration for the Trustees.
If you want to enquire about making a claim, please contact a member of our team on 01895 207 835 or 01895 207 295. Alternatively, you can send an email with your name and contact information and brief details as to the nature of the accident/clinical negligence and the injuries sustained to PI@ibblaw.co.uk and one of our team will be able to help you.
