What are 'reasonable losses' in an injury claim?

Anyone who claims compensation after an accident has a legal a duty to mitigate, or keep their losses to a reasonable minimum.

Personal injury compensation is intended to put the Claimant back in the same position they would have been in had the accident not occurred. Part of the compensation awarded to a Claimant mops up their out of pocket expenses, to date and in the future.

However, the law does not support Claimants who let losses run away with themselves. The basic principle is that losses should be kept to a reasonable minimum.

What type of losses may be recovered in a personal injury claim?

In theory, any financial losses may be recovered as part of a personal injury claim, as long as the Claimant suffered those losses as a result of the accident. Common examples include:

  • Travel expenses
  • Property damage
  • Medical expenses
  • Personal care costs, for example the cost of a carer to assist with daily chores
  • Special equipment, for example, installing a stair lift or wheelchair ramps in the home
  • Loss of earnings where the Claimant is unable to work for a period of time.

Losses must be "reasonable"

The law requires that personal injury Claimants "mitigate" their financial losses. Mitigation means taking sensible steps to keep the losses down. The guiding principle is reasonableness.

Suppose, for example, that a Claimant is involved in a car accident that badly damages his car. If the car garage or insurance company offers a courtesy vehicle while the Claimant's car is in the shop, it would be reasonable to accept the courtesy car as this keeps the Claimant's losses down. Hiring an expensive car to get to work would not be reasonable as it incurs an additional and unnecessary expense. 

The consequences of failing to mitigate

Failure to mitigate losses can lead to a disappointing settlement with the other side or their insurance company. Put simply, the other side can refuse to pay unreasonable costs. Using the example above, the Claimant would not be able to recover the cost of the hire car.

A failure to minimise losses does not mean that the claim itself is lost. It simply means that a Court has the power to reduce the Claimant's compensation if it believes a Claimant has not behaved reasonably. Hence, it is crucial that personal injury Claimants make the effort to keep their losses to a minimum.