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Credit Hire – A necessary evil or just evil?

Thursday, April 29th, 2010

Frequently after a motor accident there is one driver who is completely blameless and another who must accept responsibility for the accident they have caused and as such according to the law of the land, must also compensate the other driver for the losses they incur.  This compensation is usually handled by the at fault driver’s insurance company.

One of the big areas of claim now relates to the hire of a replacement vehicle while the non fault driver’s car is off the road being repaired or while they await receipt of the total loss cheque for their vehicle.

The non fault driver will frequently be introduced to a credit hire firm by their insurer, broker or body shop.  That firm will usually tell them that they can hire an equivalent car to their own for as long as they need at no cost to themselves as all the charges will be reclaimed from the at fault driver’s insurance.

A credit hire firm however is not a usual car hire company.  As the name suggests, their vehicles are hired out and the charges are on a credit basis allowing them to be recovered from the at fault driver’s insurance before payment is required.  It is generally accepted that the cost of anything purchased using credit rather than cash is higher and this is usually the case with credit hire vehicles.

The use of credit hire means that everyday, insurers are receiving claims for credit car hire totalling many thousands of pounds which are much higher than if the vehicles had been hired on a cash or spot hire basis.

There is case law that basically states that an innocent driver is only allowed to recover the spot hire rates unless they can prove that they had no alternative other than to approach a more expensive credit hire company.  This is where credit hire comes into its own and can provide a valuable, if not expensive, service to innocent drivers.

Vehicle repairs can take some time, which can mean that the cost of hiring alternative transport, even from a cheaper spot hire firm, could be prohibitive to many people.  The legal term for this is that the hirer is impecunious.  This leaves them with no option, but to resort to credit hire or do without a vehicle which might be essential for their daily life.

Credit hire firms also generally have a more generous acceptance criteria than standard hire firms, which means they can often hire to young / older drivers or convicted drivers which other hire firms would not be able to accommodate.  Again these drivers have no option but to resort to credit hire or forgo a vehicle whilst theirs is off the road.

Geoden Agency can assist credit hire firms in showing that their client had no option but resort to the use of credit hire through their claimant credit hire investigation services.  These include taking a statement from the Claimant setting out their financial position or surveying the spot hire market to show lack of available alternatives to the Claimant.

Geoden Agency can also help motor insurers and defendant solicitors when faced with a credit hire claim.  Their defendant credit hire claims investigations include services such as spot hire rates investigations and status reports on claimants to minimise the risk of an impecuniosity defence.