Personal Injury claims and accident insurance policies

I was posed a question today - it’s a very good one and applies in most claims.

Q: Grant, remind me, in a personal injury claim, are the proceeds received by a claimant from their own accident insurance policy (in this case, a PAX policy for a serving soldier) taken into account (i.e., deducted) when assessing the damages recoverable from the MOD?

Relevant Legal Principles 

The general rule in English law is that a claimant should be put, so far as money can do so, in the position they would have been in had the accident (and consequent injuries) not occurred.

However, the law recognises certain exceptions to the rule against double recovery, particularly in relation to benefits received from third parties. Case law has established that the proceeds of an accident insurance policy taken out and paid for by the claimant are to be ignored when assessing damages. This is often referred to as the "insurance exception."

The rationale is that the wrongdoer should not benefit from the claimant's prudence in insuring themselves, nor should the claimant be penalised for having done so.

Application to the Question 

Accordingly, if a claimant in a personal injury claim has received a payout under their own accident insurance policy (i.e., a policy for which the claimant paid the premiums), the sum received is not to be deducted from the damages recoverable from the defendant. The claimant is entitled to claim the full amount of their financial losses from the defendant, regardless of any insurance payout.

This principle does not apply if the insurance was provided by the defendant (e.g., employer's insurance) or if the insurance payout is subrogated (i.e., the insurer has a right to recover from the tortfeasor). In such cases, different considerations may apply.

Caveats and Limitations 

• The rule applies only to insurance policies taken out and paid for by the claimant
• Statutory exceptions may apply in certain contexts (e.g. awards under the Armed Forces Compensation Scheme, which are subject to recoupment)
• If the insurance policy is provided by a third party (e.g., employer), the position may diffeR
• The principle does not extend to all collateral benefits; each type of benefit must be considered on its own legal basis – seek advice folks 

Conclusion

In summary, the proceeds of a claimant's own accident insurance policy are ignored when calculating damages for financial losses in a personal injury claim. The claimant is entitled to recover their full loss from the defendant, and the insurance payout does not reduce the damages award.

© Grant Evatt 10.09.25