Drastic Changes to Compensation Laws
The NSW Government is currently planning legislative amendments which will have far-reaching effects on the laws governing compensation for people injured in motor accidents.
Currently people injured in a motor accident can receive compensation for up to $5000 in treatment and lost wages and are entitled to additional compensation provided they can prove the accident was someone else’s fault or caused by someone else’s negligence.
However, there are restrictions in place in this fault-based system that limit an individual’s right to receive compensation for pain and suffering. Currently an individual must be assessed as having injuries greater than 10% permanent impairment before they are entitled to this compensation.
This system has its flaws but has generally been working to compensate individuals who have been injured in accidents that are someone else’s fault. The system also makes allowance for the payment of limited legal costs.
Now the Government is seeking to introduce a no fault system where anyone injured in an accident will be entitled to compensation. This will result in a significant increase in the number of people claiming compensation, so to counter possible cost blow-outs the Government proposes to significantly reduce the amount of compensation anyone can receive, even if the accident was not their fault.
The only upside of the proposed system is that everyone will receive some compensation, even if the accident was their fault (which is not currently the case).
There will still be limited rights for “general damages” however this will be restricted to individuals whose injuries are assessed at being greater than 10% permanent impairment.
Importantly, the Government is seeking to restrict the circumstances when legal costs will be recoverable so that insurers do not pay anything towards legal costs.
Individuals will have to pay their own legal costs, which, combined with the reduction in compensation payouts, could result in the legal costs outweighing the amount of compensation they receive.
Accident victims are often most in need of legal advice, as they are up against large insurance companies who have significant resources at their disposal to challenge claims and thwart an individual’s right to compensation. Many people who have been injured in an accident will be unable to work and will also have medical expenses they will need to pay unless an insurer accepts the claim, so may be reluctant to risk spending their limited resources on legal costs they may not be able to recover.
These changes to the law are currently making their way through parliament so could be announced without warning. People injured before the date the laws change who have not yet made a claim will be subject to the new laws.
Therefore anyone who has been injured in an accident that may be the fault of some other person should seek immediate legal advice in order to lodge a claim so that their rights and entitlements are protected.