In personal injury claims, deductions of benefits from injured persons compensation are complex and happen when an injured client needs to claim state benefits following their injuries.
Some state benefits may be repayable to the Department for Work and Pensions (DWP). The DWP manages this through the Compensation Recovery Unit (CRU). The CRU recovers those benefits from the person who pays the compensation, which is usually an insurer.
The reason this happens is to prevent an injured person from being compensated twice, something known as ‘double recovery’. The idea is that a person should not be compensated through the benefits system and through compensation. As a result some benefits will be offset against the parts of compensation which represent a loss of earnings, the cost of care and transport costs.
A Worked Example
Let’s say, for example, that a person is badly injured in a road traffic accident and cannot work for six months. Sadly, for many people, they will not be paid while they are off work. In that situation, you are able to claim from the benefits system to support themselves and their families whilst they were unable to work.
When the injured person’s Solicitor comes to value their personal injury claim, they would claim for the lost earnings in the 6 months they were unable to work. The insurer, when they pay the compensation, would have to deduct the cost of the benefits from the overall total for loss of earnings and repay the cost of the benefits to the DWP.
If the loss of earnings in those six months was £10,000 and benefits claimed were £4,000, then the insurer would pay the DWP £4,000 and the £6,000 balance would go to the injured party.
Gratuitous Care
Another commonly claimed loss is for gratuitous care. This is often claimed when people need someone to fetch and carry for them because they are incapacitated due to their injuries. Examples might be doing the food shopping, taking over the household chores, or driving the injured person to and from medical appointments. This care can be claimed at an hourly rate, usually (if the person providing the care is not a professional carer) around £6.50 per hour.
Attendance Allowance, the care component of Disability Living Allowance and the living component of Personal Independence Payments will be deducted from claims for gratuitous care.
Mobility
Although less commonly claimed, an injured person’s claim for transport costs such as mileage, taxi fares, or bus fares will trigger deductions in respect of the various benefits paid in relation to a person’s mobility.
Deductions from benefits have to be done on a ‘like-for-like’ basis. It is not possible for a benefit linked to loss of earnings to be deducted from a part of a claim relating to care or mobility.
Benefits are never deducted from compensation awarded for a person’s injuries.
Another way a person’s benefits could be affected by personal injury claims is if the injured person receives compensation which will take them over the threshold to receive benefits. In that situation, it is possible to set up a personal injury trust, which will protect your benefits.
At Taylor&Emmet, we can advise on all aspects of a personal injury claim. If you have a query or wish to make a claim, please contact our experts by emailing info@tayloremmet.co.uk or call us on 0114 218 4000.
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