Mitigating losses when making a personal injury claim

What does mitigating losses mean?

If a victim of a road traffic collision has sustained an injury as a direct result of that accident they may be entitled to bring a claim for personal injury against the negligent party.

When making a claim for personal injury the injured party often ignores the fact that they have a legal duty to mitigate their financial losses. The legal duty for claimants to mitigate their losses applies to both general and special damages.

General damages represent the compensation for pain and suffering and loss of amenity. In addition to compensation for general damages, claimants are entitled to be awarded special damages for any financial loss resulting from the accident.

So what exactly does mitigating losses mean?

Claimants are required to ensure that they take reasonable measures, where possible, to keep their losses at a reasonable level if not to a minimum. Reasonableness is the guiding principle the Courts follow when deciding whether the claimant has mitigated losses. All that is required is that you, as a claimant, take reasonable steps to reduce your losses and follow the aim of compensation, which is to put you back in the position you were prior to the accident.

What happens if I do not mitigate my losses?

If the claimant does not take reasonable steps to minimise loss, any claim brought for damages may be reduced as a result.

What does keeping it reasonable mean?

If your car was badly damaged and cannot be driven, hiring an expensive car is not reasonable, especially if you have another vehicle or if your insurance is providing you with a courtesy car.

Medical treatments and loss of earnings are two areas of personal injury litigation that regularly give rise to arguments over mitigation of loss.

When medical treatment is recommended by the independent medical examiner which is likely to improve the claimant’s condition and the claimant unreasonably decides not to undergo the treatment, the insurers may take advantage of the claimant’s decision and seek to argue that the claimant has failed to mitigate.

Subject to liability not being an issue, the claimant’s solicitor may arrange for the treatment on a private basis.

In respect of loss of earnings there are situations where the claimant cannot return to work for a prolonged period of time or the injury is so severe that it prevents the claimant from returning to their pre accident employment. The best example of such a situation is the Morris v Richards case.

Morris v Richards

In Morris v Richards a seriously injured radiographer could not return to her pre-accident job but was successful as a marketing manager, earning more than her pre accident occupation. Nevertheless, the claimant did not enjoy her new role and resigned after 7 months. At the date of the trial she was unemployed. The insurers argued failure to mitigate.

The Court of Appeal took the view that the proper place to start was to state that the defendant was to blame for the claimant’s injuries and that this had caused her to lose her job for which she had trained. In a very fact sensitive decision, the Court of Appeal found in the favour of the claimant.

In conclusion, when making a claim for personal injury, the claimant should ensure that the claim is proportionate and reasonable. The purpose of the compensation is to put the claimant in the position they would have been if the accident would not have taken place. The purpose of the compensation is not to put the claimant in a better position than they were prior to the accident.

The claimant and their legal representatives should ensure they make a reasonable effort to reduce loss.