Now for some reason only known to the Government that sets the laws and the amount of compensation that can be claimed for a bereavement award, the amount on offer is only meant to be a token value. One could say that no amount of money can ever replaced a loved one. However, there has to be reality here when someone is unlawfully killed in an act of pure recklessness on the road or disregard over health and safety if an employee is loses his or her life at work. But where you live in the United Kingdom determies who can claim and the amount that can be claimed, an article in The Times refers; Bereavment Compensation A Lottery
As mentioned above this is set by the Government and has increased from £12,980 to £15,120 for any fatal accidents that have occurred on May 2020. The amount so unjust.
What is the post code award for a bereavement award? Well those who lose a loved one in Scotland, it is reported can obtain substantially more than those bereaved families in England and Wales. It appears that in Scotland they are more sympathetic to those families who lose a loved one through no fault of their own. The Courts will assess the closeness of love an affection to the deceased an place a more reasonable award.
Who can receive a bereavement award?
This is also where the lottery of where you live plays a part. In England and Wales the Fatal Accident Act 1976 is very restrictive as to who can claim a bereavement award. For instance, where a parent loses a child in a road accident, the parent cannot claim for a bereavement award if the child is 18 years or older. Makes not sense. Similarly if a chid loses a parent, the child cannot claim a bereavement award, no matter how old.
The question is why not? If a family member is killed in an accident it causes a financial loss to the household in addition to the loss of love and support for the life time of the surviving partner and children. Often the partner of the deceased will be unable to return to work for a substantial time (where the law says that they cannot claim for any loss of earnings by the way another unjust part of the laws that apply to England and Wales). The amount does not justify the loss to the family left behind. Further a larger bereavement award will also be
What is the lottery postcode for a bereavement award?
The Times Newspaper refers to the differnence in laws between Scotland and England and Wales;
“There is a postcode lottery when someone is wrongfully killed in the UK,” says Sam Elsby, the president of the APIL which produced a report showing that “only a very rigid, prescribed list of relatives qualify for statutory compensation for their untimely loss in England, Wales and Northern Ireland”.
The association says that in Scotland “the law has no difficulty in recognising the closeness of different relationships”. But in the other UK jurisdictions unmarried fathers do not qualify for payments, and step-parents, parents of adults, brothers and sisters are left out. “It is woefully discriminatory and out of date,” Elsby says.
It is difficult why the law makers in England and Wales put such token amounts on the value of life. It is because the motor injurers and employers liability insurers who are large multi international companies can lobby Government to keep payments to bereaved families low.
Because the bereaved families are vulnerable? I say this because of the phone hacking scandal where celebrities can claim over £200,000 for ‘hurt feelings’ for someone listening in on their phone calls. I have no issues with the award, but my issue is how does this compare to losing a loved one killed by another? There is simply no comparison.
How can I instruct a Bereavement Award Solicitor?
Please only contact expert solicitors in this area. A ‘personal injury’ lawyer is not usually the best solicitor to instruct unless they have a specialist interest in fatal accidents because the law of calculating compensation is different. The unwary solicitor may fail to obtain the maximum result of bereaved families.
Please remember that it is not just a bereavement award that can be claim, there are many other aspects such as funeral costs, headstone costs, dependency claim and care and support claims that can add to a substantial amount.
Please contact us now for free support and advice: bereavement awards solicitors.
There are only a limited class of people who can claim for bereavement compensation award in a civil claim set out under the Fatal Accidents Act 1976:
Surviving civil partner
Parents (if the child was under 18)
Unmarried couples? (living together as husband and wife/same sex couple for at least two years prior to death – see further below).
Civil Partners Act 2004 introduced a claim for a bereavement award. But what about unmarried couples? The Fatal Accidents Act 1976 Guide we have provided clearly shows that if a couple is unmarried or not in a sanctioned civil partnership, the death of a partner due to a fatal accident were not entitled to claim.
If a partner has died due to a fatal accident caused by another, providing that the surviving partner was:
married to the deceased,
in a civil partnership with the deceased,
A bereavement compensation award can be made. However, if they were not married or in a Civil Partnership at the time of the fatal accident claim, no compensation for a bereavement award is payable under the Fatal Accidents Act 1976. Please note a parent can claim for a bereavement award for a loss of a child providing that the child was under 18 years of age at the time of death. However, this article concentrates on couples who cohabit by choice or otherwise and choose not to marry or be in a Civil Partnership.
In a recent development and very much welcomed, came a challenge through the Courts where an unmarried partner tried to claim for a bereavement award despite the limited class of people who can claim under the 1976 Act.
In this case, Miss Smith had cohabited with her partner for over 10 years when her partner unfortunately died due to a medical accident. She believed the law was unfair and incompatible to other laws such as pursue the bereavement award as well as a declaration of incompatibility under the European Convention of Human Rights with regard to the right for family and private life and protection from discrimination respectively. She had the right to challenge but no compensation was payable. The law has changed and it is likely that unmarried couples may be able to claim for a bereavement award but the Fatal Accidents Act 1976 has not been changed to date but is about to be amended at the time of writing this page, see below.
Change in the Law to Qualify for a Bereavement Award
Following the Court of Appeal case in Smith, the Government is intending to change the law so that unmarried couples can also claim compensation for a bereavement compensation following a fatal accident claim if they were living together for a period of two years prior to death as ‘husband and wife.’
Below is a comprehensive guide on Cohabitation is rapidly growing in popularity amongst couples in the UK. Even though an unmarried couple may be able to bring a claim, they must satisfy the Court that they were ‘living together‘ for a period of two years prior to death.
While the law is gradually adapting to reflect these changes and provide greater protection for cohabitees, as yet there are no automatic legal rights for cohabiting couples. So what happens if you are a cohabitee and your long-term partner passes away in a tragic accident?
Where the accident is found to be the fault of a third party, the Fatal Accidents Act 1976 entitles certain categories of persons to make a claim for compensation to reflect their loss of financial dependency on the deceased. These include spouses, civil partners and children of the deceased.
That they were living with the deceased in the same household immediately before the date of the death
That they had been living with the deceased in the same household for at least 2 years before that date
That they were living during the whole of that period as the husband or wife or civil partner of the deceased.
The Relationship: Living Together, Cohabiting, What Does It Mean?
The fact that people cohabit and live together does not mean that they are a couple who have intended that the relationship was akin to a ‘husband and wife’ situation. There must be some sort of criteria, a formula if you like, that demonstrates to others and the court that they were indeed living or cohabiting together with that intention.
Several factors that can help determine if couples who are not married or in a Civil Partnership and may be useful to satisfy the court that they were cohabitants under the law. Some examples found outside of the Fatal Accidents Act 1976 are below:
The Family Law Act
Section 62(1) of the Family Law Act 1996 defines “cohabitants”, for the purpose of eligibility to apply for occupation and non-molestation orders, as two persons who are neither married to each other nor civil partners of each other but who are living together as husband and wife or as if they were civil partners.
Couples Cohabiting – Adopting Children
Couples are defined as two people (whether of different sexes or the same sex) living as partners in an enduring family relationship.
Common Factors for Living Together to Satisfy a Claim for Bereavement Compensation.
It appears that the common factor, to be summarised in a short sentence can be typically described as ‘an enduring sexual or intimate relationship to the exclusion of all others.’ The most common formula uses the “marriage analogy”, while some more recent legislation has referred to “partners in an enduring family relationship“.
Bereavement Award and The Fatal Accidents Act 1976
The criteria in the provision of the FAA 1976 for couples ‘living together’ as husband and wife can be broken down into their component parts as below:
The Courts have made clear that the relevant phrase for consideration is “household” and not “house”; thus it is not sufficient to show that a claimant was merely living under the same roof as the deceased.
The case of Gully v Dix  EWCA Civ 139 involved a claimant who sought to make an application for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975. While this case was decided under different legislation, the criteria to be established was largely the same; the claimant had to demonstrate that she was living in the same household as the deceased during the whole of the period of two years immediately before the date of his death. In considering this case, the judge commented that:
“they will be in the same household if they are tied by their relationship. The tie of that relationship may be manifest by various elements, not simply their living under the same roof, but the public and private acknowledgement of their mutual society, and the mutual protection and support that binds them together”
“have elements of permanence, to involve a consideration of the frequency and intimacy of contact, to contain an element of mutual support, to require some consideration of the degree of voluntary restraint upon personal freedom which each party undertakes and to involve an element of community of resources”
Thus a person seeking to make a claim for compensation under the Fatal Accidents Act 1976 would need not only to show that they were living with the deceased, but also provide evidence as to the permanence and stability of their relationship.
This may include things such as shared bills and bank accounts, as well as other household arrangements – for example cooking, laundry, reminders of appointments and so on. While some of these factors may simply be indicative of a strong friendship, the combination of all factors must point to a deep-rooted bond and an element of exclusivity.
For example in the case of Swetenham v Walkley & Bryce  WTLR 845, the deceased and the claimant would attend social events as a couple, and the claimant would do the deceased’s washing while the deceased would pay for meals when they went out. They would support each other when ill. Although the defendants argued that they had merely been close and mutually supportive friends, the judge held that the couple had a mutuality of support and understanding to the extent that they would put each other before other friends.
In addition to the internal nature of the relationship, the external nature will also be relevant; in other words, the extent to which the claimant and deceased presented themselves publicly as living together in a sustained relationship. In Pounder v London Underground Ltd  PIQR 217 (referred to in Kortke v Saffarinig  where the claimant girlfriend of the deceased was entitled to claim under the Fatal Accidents Act 1976, the strength of her case was her ability to rely on independent witness evidence giving the strong impression that the witnesses believed the deceased to be living at the claimant’s flat.
2. Separate houses
An important principle to be drawn from the above case of Pounder is that the claimant and deceased were held to be living in the same household despite the fact that the deceased had retained his mother’s address for all official documents.
A similar situation occurred in Lindop v Agus  EWHC 1795 (Ch), decided under the Inheritance (Provision for Family and Dependants) Act 1975, in that the claimant lived as the deceased’s wife in the same household while retaining a different address for official correspondence. The court held that the fact that bank statements and other documents were sent to a different address was not in itself enough to defeat her claim and there was sufficient corroboration from witness evidence to find that they had lived in the same household.
“It is clear from the authorities that in principle a person may be a member of household A, albeit he has a second house or home elsewhere at B to which he departs temporarily from time to time”
In that case, the claimant brought a claim under the Fatal Accidents Act 1976 after her partner was killed in a road traffic accident. In the years prior to the accident, the claimant and the deceased had owned and lived in separate properties in Sheffield and Doncaster, staying together at weekends.
Although the judge considered that the retention of the deceased’s house in Doncaster was not in itself a barrier to establishing the criteria for the claimant’s claim, what did invalidate her claim was the fact that the deceased himself considered himself as resident at his Doncaster address and indicated that he and the claimant had not yet reached the position of treating the Sheffield address as their mutual home.
In fact, the deceased had kept his wardrobe and possessions at his home in Doncaster, and only really began to plan a life with the claimant after she discovered that she was pregnant. However, the legislation requires that the claimant and deceased to have lived together for two years prior the date of the deceased’s death, and the pregnancy was discovered less than two years prior to his death.
These cases demonstrate that the fact that the claimant and deceased had separate houses or addresses will not automatically prevent the claimant from proving that they had lived in the same household as required by the legislation. More important are the intentions of the couple themselves and the nature of the relationship as a whole.
3. Brief Periods of Absence
It follows, then, that brief periods of absence will not break the continuity of “living together”. In the case of Pounder, the judge accepted that the deceased may have returned to his parents’ house for a week or so at a time but he was still able to find that the claimant and deceased had lived together at the claimant’s home. In addition, the judge found that although in the year before the accident in which the deceased was killed the claimant had gone to a woman’s refuge for a period of 3-4 months this did not break the period of living together. Evidence showed that the claimant had returned home regularly and stayed overnight.
In Gully v Dix  EWCA Civ 139, concerning similar provisions under the Inheritance (Provision for Family and Dependants) Act 1975, the claimant had been living separately from the deceased in the three months preceding his death. This separation was in response to an incident in which the deceased had threatened to kill himself. In finding that the claimant and deceased had nevertheless been living in the same household, the court considered that regard was to be had to the “settled state of affairs during the relationship and not the immediate de facto situation prevailing before the deceased’s death”.
Thus in the same vein as the reasoning which underpins the approach taken with separate houses, the mere fact of an absence will not negate the “living together” element of the legislation. The intention of the parties will be more determinative and a court may find that a person was living in the same household as the deceased even if they were living separately at times if it can be demonstrated that there was no settled intention that the relationship was at an end; it was merely suspended.
4. Civil Partners
While the legislation previously referred to the need to demonstrate that the claimant and deceased had been living together “as husband and wife”, growing acceptance of same-sex relationships led to an amendment being made in 2004 to the effect that cohabiting same-sex couples can also bring a claim for compensation under section 1(3)(b).
There are no separate requirements for same-sex cohabitees; the same criteria that must be established by cohabitees advancing their claims as husband and wife apply. Thus a claimant must demonstrate a relationship that goes beyond casual and produce evidence to show that it was sufficiently permanent and constant, both privately and publicly.
So far this article has dealt with the ability to bring a claim for compensation flowing from the claimant’s loss of financial dependency on the deceased. This entitlement is calculated on a case-by-case basis and beyond establishing that they fall within a particular class of persons entitled to bring a claim, the claimant must also show that they have or will have suffered a loss. For example, a claimant may claim compensation where they can show that they have suffered a loss of prospective earnings or pension. The court may also take into account non-material losses, such as the loss of the deceased’s role in family life – these include things such as birthday presents for children or the fact that the deceased regularly carried out DIY or gardening around the house.
However, in addition to this entitlement, the Fatal Accidents Act 1976 also introduced the Bereavement Award, a one-off payment of £15,120 to be paid to certain relatives. Currently this award is limited to the wife or husband or civil partner of the deceased. The only exception is where the deceased was a minor, in which case his or her parents may be entitled to the Bereavement Award.
Therefore, as the law stands, cohabitees are not able to claim compensation for bereavement under the 1976 Act.
This provision has been widely criticised, particularly in light of the fact that more and more young couples are choosing cohabitation rather than the more traditional route of marriage. Where a couple has cohabited for years and may even have started a family together it seems unjust to deny them the Bereavement Award solely on the basis that they have not entered into a formal marriage. The inequity becomes even starker when you consider that a couple who have been married for just several months and have no children will be entitled to the Bereavement Award should one of them die.
In this case, the claimant, Ms Smith, and the deceased, Mr Bulloch, had cohabited for 11 years before his death in October 2011 after he had contracted an infection following a hospital procedure. The NHS Trusts admitted that they were to blame but argued that Ms Smith was not entitled to the Bereavement Award as she and Mr Bulloch had not been married.
Ms Smith argued that in denying cohabitees from claiming the Bereavement Award, the legislation breached her human rights, namely Articles 8 and 14 of the European Convention on Human Rights. Article 8 ECHR protects the right to respect for private and family life while Article 14 ECHR provides protection against discrimination. Ms Smith’s argument was that the legislation discriminated against her as an unmarried woman.
The Court of Appeal noted that the Bereavement Award was intended to reflect the grief that flows from intimacy inherent within couples who were married or in a civil partnership. In that respect there was no distinction between couples in a marriage or civil partnership, and couples who were cohabiting.
Just as the right of civil partners to claim bereavement damages had been added by the Civil Partnership Act 2004 to reflect the growing incidence of same-sex relationships and the need to protect their right under Article 8 ECHR, so too does the law need to reflect the fact that cohabitation can and does give rise to intimate and long-term relationships which stand to be compensated for the grief experienced when one party dies due to the fault of a third party.
The Court in Smith issued a section 4(2) declaration under the Human Rights Act 1998 to the effect that section 1A of the Fatal Accidents Act 1976 is incompatible with the ECHR. While this does not in itself change the law, it paves the way for Parliament to amend the legislation in order to allow cohabitees to be awarded bereavement damages.
(1) the duration of the relationship;
(2) the nature of the relationship;
(3) the degree of mutual commitment to a shared life;
(4) the nature and extent of common residence;
(5) whether the parties maintained a common household;
(6) whether or not the parties had a sexual relationship;
(7) the emotional or physical intimacy of the parties’ relationship;
(8) the extent of financial interdependence or dependence, if any;
(9) the extent to which any financial dependence was encouraged or fostered by the relationship;
(10) the ownership, use and acquisition of property;
(11) the performance of household duties;
(12) whether the parties have or care for children, either of both or one of them;
(13) the reputation and public aspects of the relationship;
(14) oral or written statements or promises made to each other, or representations made jointly to third parties, regarding their relationship;
(15) the extent to which the parties acknowledged responsibilities to each other, for example, by naming the other as eligible to receive benefits under an employee-benefit plan; and
(16) the parties’ participation in a commitment ceremony or registration as a domestic partnership.
The law on the rights of cohabitees when one dies in an accident found to be the fault of a third party is gradually coming in line with modern society and the social acceptance of the legitimacy of cohabiting couples. Cohabitees may claim compensation for loss of dependency provided they are able to demonstrate that they lived in the same household as the deceased. Each case will be judged on its own specific facts but the underlying principle is that claimants must show that they were in a relationship of sufficient intimacy and permanence, taking into account the relationship as a whole and how they conducted themselves both privately for themselves and publicly for the outside world to witness.
As it stands, cohabitees are not entitled to a Bereavement Award; however, this will change in the near future. In response to Smith v Lancashire Teaching Hospitals NHS Foundation Trust, the Government laid a proposed draft Remedial Order before Parliament on the 8th May 2019 designed to extend the right of bereavement damages to cohabiting couples. Just how long before this becomes law remains to be seen but it is certainly a step in the right direction.
In accordance with the Fatal Accidents Act 1976 reasonable funeral expenses can be recovered against the party at fault. Funeral expenses can also be covered on behalf of the estate claim under a fatal accident (Law Reform Miscellaneous Act 1935) but in practice most claims for funeral costs are in accordance with the 1976 Act.
This is because the dependents left behind are the ones who generally pay for the funeral cost and that expense is recoverable back to them. If the expense is paid by the deceased’s estate then it can be recoverable by the estate.
Average Costs of a Funeral
Funerals are not cheap and can put a bereaved family into debt. It is reported that the average costs of a funeral is now in the region of £4,000. Combined with the loss of income or carer which often arises following fatal accident claims means that not only do bereaved families have to cope with the emotional stress of losing a loved one but also the added burden of loss of imcome or care within the family unit.
This can lead to unnecessary stress and burden.
How can we help?
At fatal accident claims, we are experienced in dealing with the recovery of the funeral expenses following a fatal accident in addition to the other claims that can be made which can be substantial especially if the deceased had a young family.
The law under the Fatal Accidents Act 1976 is outdated and should be amended to reflect society as it stands today not in mid 1970’s.
The law under the Fatal Accidents Act 1976 needs updating as the family units have changed since the law came into force.
The Family Unit is Different Today
The law that was passed in the 1970’s dealt with a time where the family unit typically was white, husband and wife with 2.2 children.
The husband would be the ‘bread winner’ and thus go to work and provide for the family. The wife would stay at home and become the house wife. She will look after the children and the home. Cook all the meals and generally clean the house. The children would leave the home at an early age and go to work. Not as many would go to university, that was for the privileged few.
The children will then repeat what their parents had done and the cycle is complete.
Family Unit Today
The family unit today is more multi-cultural, diverse, same-sex marriages, increase in divorces and more step-children etc. Further women are more independent and are ‘bread winners’ in their own right.
The problem is that when a loved one is lost in a tragic accident the law can create unjust consequences. For more information in the unjust application of the Fatal Accidents Act 1976 click on the webpage.
Following the tragic loss of a loved one in fatal accident claim the law provides what bereaved families must undertake to obtain justice and lastly compensation.
However the Fatal Accidents Act is pitiful and outdated. There is not a great deal we can do as specialist solicitors in this area other than apply to law to the best of our ability and achieve the best possible result given the law at it stands.
What is the Fatal Accidents Act?
The Fatal Accidents Act is passes as law by the Government. It is not judge made law. All judges and solicitors do is apply and interpret the law in the given circumstances. The 1976 Act governs all fatal accidents in England and Wales. It does not apply to Scotland who have their own laws which provides greater justice to the bereaved families left behind.
What is a Bereavement Award?
A bereavement award is payable where the deceased was killed following an accident that as caused as a result of another persons actions or omissions. The current award is just £12,980.
The most common fatal accidents claims that solicitors encounter in England and Wales arise out of:
We are asked simply out of curiosity and as part of a tragic loss of life due to a accident. A bereavement award is commonly payable where a close family member loses the life of a loved one. The amount payable is a poultry £12,980. Primarily this is due in the following type of accidents:
There is a limited class of close family members who can claim.
Surviving spouse of the deceased, including now surviving civil partner.
Parents of child, providing child at the time of death is under 18 years.
That is about it. Surprisingly a child cannot claim any bereavement award for the loss of his or her parent(s), guardian or grandparent who may have been the primary carer at the time of the tragic death of the adult. Absolute nonsense and totally unjust.
Fatal Accidents Act 1976
The statutory provision for payment of a bereavement award is found under the Fatal Accidents Act 1976 a rather old an unjust piece of law, made by the Government.
It is for the Government to change the law but under the Conservatives, this looks remote. In fact quite the opposite.
Sign of the times. In the 70’s and 80’s the problem seemed to be with alcohol-related deaths on the road. However there in the United States, there are more fatal road accidents due to drugs than alcohol.
Why is this relevant I hear you say as this is an American problem? The answer is short and to the point. It seems that whatever America does, the UK will follow some 10 years later. A maker we have to consider no doubt.
Drink and Drugs
In one report where the statistical information has come from, (Governors Highway Safety Association and the Foundation for Advancing Alcohol Responsibility) advisers that there is a steady increase in drug use amount drivers killed in road traffic accidents.
In 2005 28% of toes tested were found to be under the influence of drugs, but in 2009 this increased to 33%.
35,000 Killed in Crashes
The statistics are shocking and every life lost is a personal tragedy that could have been avoided. Of the drivers who were fatally killed, 57% were tested for drugs and 71% for alcohol.
Over a third were tested positive for drugs.
Combined with those to criminal charges against the offender, the family left behind following the loss of a loved one will want to ensure the justice is achieved by the conviction of the offender and also fatal accident compensation can be obtained to relieve some of the financial stress and worry.
The Church is often what we use to for family and friend to get together on important stages in our lives:
Facebook is Taking Over!
Now Facebook is taking over (at least digitally). We are still using The Church for such important events in our lives (and death) but Facebook is now so vast and widely used that such events also take place digitally.
Facebook is certainly a place for light-hearted messages, thanks, updates but now even announcements of a death in the family are often an important message board to inform family and friends.
In a recent study by Co-Op funeral care a third of adults who want their loved ones to post online when the die have already let someone know that tho sis their wish.
We Deal in Grief in Different Ways
Everyone is different. Some will shudder at the thought of advising loved ones or friends of a loss. They would want to meet the family in person, make that call rather than announce it on social media platforms.
However others are use to posting anything and everything which includes announcing the death of a loved one.
Announcements of death on social medial ever growing. Anyone who has lost a loved on in the past 3 years due to an unlawful killing should consider seeking legal advice to help them make a fatal accident claim for compensation and getting to the truth of what happened.
Contact us now for help and support all under a no win no fee solicitors guarantee.
Dramatic increased in court fees are not uncommon with the Conservative Government. Now the bereaved families are set with another tax through probate fees which will come into force in May 2017.
What is Probate in a Fatal Accident Claim?
Probate is the court procedure to ensure that the person who has died is officially recorded and to show the assets and liabilities of deceased immediately before death.
Probate will be obtained by the deceased executors if a will was left behind or through the next of kin (known as intestacy) if there is no will.
The person(s) in charge of the deceased affairs will then issue the relevant paperwork at the local court to obtain permission to officially deal with the legal affairs of the deceased which includes selling or maintaining assets and paying debts of the deceased.
In addition, of course, the person(s) dealing with the affairs of the deceased will also need to file the relevant IHT (Inheritance Tax Forms) to inform the Inland Revenue of how much tax, if any, the estate has to pay.
Fatal Accident Claims Increase Probate Fees
Fatal accident solicitors will need to advise bereaved families of the increase in the probate court fees, which can raise to £20,000 simply to authorise the court to proceed through probate. There is nothing more the court will do for this hefty fee, it is just a backdoor method of gaining more tax from the dead.
In a shock move by the Lord Chancellor it was recently announced that the ‘discount rate’ that is applied to serious and fatal accident claims is to be decreased from 2.5% to 0.75%. The end result is that for further awards of compensation (that is money that is used to compensation victims for fatal accidents and serious non-fatal accidents) for a term in the future or a life time award will obtain more money.
Insurers argue the increase in compensation award for serious injuries and fatalities will cost the industry £6 Billion.
How the Discount Rate Works to Calculate Future Awards
In simple terms, when an award for compensation is made, it is designed to put the injured victim (or in a fatality) the victim’s estate and dependents back into the same financial position as they would have been had the accident not taken place. No more and no less.
Where, for instance in a life changing injuries or serious injuries case the employee can no longer work, it would mean that the injured victim would lose out on his/her wages for years to come up to the usual retirement age. See how this is calculated below:
To take a simple example, a man sustained serious non-fatal accident claims: say he was earning £20,000 net per year in wages and had 10 years working life left but the accident has put a stop to him ever working again.
What the court will do is not say that he would the worker will be entitled to 10 years x £20,000 and provide a lump sum award for his future of £200,000. The court and the non-fatal accident claim solicitors will have to ‘discount’ the £200,000 to reflect that if the worker was to receive compensation he would have had to work 10 years, but he is getting it immediately.
Thus if the worker invested £200,000 today, over a period of 10 years it is likely that £200,000 would be worth more due to interest and investment returns. Remember the worker cannot be ‘over -compensated.’ So a discount is applied depending on the age and how long the future award will last which has been applied by the courts for many years at 2.5%. So rather than received £200,000, the worker may only get say £185,000, a discount of £15,000.
But the assumption made by the court were back in the day where the UK Banks and investments had much better returned than they do today. This means the since the financial crash in in 2007 in particular the discount applied to future lump sum awards in non-fatal accident claims and fatal injuries where too much and therefore under-compensating the victim.
The new suggested discount rate has been reduced to reflect the reduced returns on investments and interest rates to as to re-balance the compensation award for victims of fatal accident claims.
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