The amount of money that an insurance company is required to pay towards your legal costs can make a significant difference to the amount of money that you receive ‘in the hand’ at the end of your compensation claim. The law imposes obligations on insurance companies to pay legal costs in certain situations and the obligations upon an insurance company vary depending on what type of case you have.
Below is a summary of legal costs that are payable by insurance companies in CTP car accident claims, public liability claims and workers compensation claims.
CTP car accident and Public Liability claims
In a CTP car accident claim or a public liability claim (for example, a slip and fall claim or medical negligence), the amount of money that an insurer will pay towards your legal costs is decided by the date of injury and also the amount of compensation you receive. The table below sets out the current law:
To explain further with reference to the above table it is useful to provide an example situation. Let’s assume your injury occurred between 2 December 2002 and 30 June 2010. The following scenario’s are possible:
- You settle your case for less than the lower offer limit, for example, $25,000. In this situation, the insurer is not required to pay any of your legal costs;
- You settle your case for $40,000. Your case falls between the lower limit and upper offer limit. The insurer is required to pay $2,500 towards your legal costs;
- Your case settles for $60,000. Your case has settled above the upper offer limit. This means that the insurer will be required to pay ‘standard legal costs’. The amount of standard legal costs will vary depending on how long your case has gone on for. Generally in CTP car accident cases and Public Liability cases, the payment of standard legal costs will exceed $20,000. Thee above examples demonstrate that there is a significant difference in having ‘standard legal costs’ awarded compared to the lower cost limits.
- It is important to be aware that the payment of ‘standard legal costs’ does not result in a claimant having 100% of their legal costs paid for. The payment of standard legal costs generally only achieves the recovery of between 60% – 70% of a claimants total legal cost bill.
- The Workers Compensation and Rehabilitation Act 2003, provides a very different framework for the payment of legal costs.
- Unless a worker is assessed as having a whole person impairment of more than 20%, there is no entitlement for an injured worker to recovery any of their legal costs.
- If a Worker has an injury assessed by WorkCover as more than 20% whole person impairment, then an injured worker does have some entitlements regarding costs, however they are significantly less than those rights of injured claimants in car accidents and public liability claims.