Credit hire FAQs
What is credit hire?
Credit hire is when a replacement vehicle is provided, on credit, after a road traffic accident. This means that you do not pay anything up front, but you will have entered into a credit hire agreement with a credit hire company. This is a formal contractual agreement and you are bound by the terms therein.
Why are solicitors contacting me?
As part of that agreement, you will have agreed for your contact details to be passed to a solicitor, so that they can act on your behalf, to recover those hire charges from the at fault insurer.
Is a credit hire vehicle a courtesy car?
This can cause some confusion, but, no, a credit hire vehicle is not a courtesy vehicle. It is not provided by your insurance company, but a separate, credit hire organisation (CHO).
I had a courtesy car on my insurance policy, so why am I now being asked about credit hire?
Simply put, your own insurer will not pay credit hire charges for you, as this is not insured under your policy. You may have an entitlement to a courtesy vehicle, but if you have accepted a vehicle from a credit hire company instead, that is completely separate. You may not have utilised your own insurance policy at all, for example if the defendant insurers have dealt with your vehicle repairs, and you received a credit hire vehicle from another company.
It is worth noting that many insurance companies do have arrangements with credit hire organisations. When they receive calls from their customers regarding a non-fault accident, they send their details over to a CHO so that a hire vehicle can be arranged. Even though you may have been referred by your insurer, this does not actually mean you are claiming on your policy, or that the vehicle is going to be provided under the terms of your policy. This should all be explained by the credit hire company when you first speak to them, however, understandably, many clients do not pay too much attention to where the vehicle is coming from, as they are just glad to be back on the road as soon as possible. They may mistakenly assume their own insurer has arranged it, but this is not the case. In reality, most insurance companies do not have a large fleet of vehicles waiting for customers. Even if they did, they would likely be standard, lower class vehicles, and are unlikely to be ‘like for like’
Many claims for credit hire charges are settled quickly between the hire company and the at fault insurer, in which case the hirer is unlikely to hear any more about it. However, there are also occasions where the amount of the hire charges cannot be agreed, and it is in those situations where solicitors will be instructed to help recover the outstanding monies.
What is a credit hire agreement?
The credit hire agreement is a contract between you and the credit hire organisation (CHO). This exists between yourself and the credit hire company only, no one else, and that includes your insurance company. This is a completely separate contract to the terms of your insurance policy.
By entering into this contract you agree to be bound by the terms of the agreement, which will usually include a clause which states that you are ultimately liable for the credit hire charges. However, that does not mean that you personally will be asked to pay them. Generally, a CHO will seek to recover the charges from the at fault insurer directly, and will not ask you to pay anything. However, this is usually in exchange for your co-operation. The terms may specify that, as long as you do co-operate, and do not act dishonestly or fraudulently, the hire company agrees to pursue the outstanding sums from the at-fault insurer, and accept any settlement as full and final.
There will likely be a term in the credit hire agreement you signed which states that any claim will be pursued in your name, as the hire charges are your loss. It is therefore in your interest to co-operate with the claim which should help bring about settlement more quickly.
Why do I have to do this if the accident was not my fault?
Whether you were at fault for the accident or not is a separate issue. Even if the third party insurer has admitted full liability for the accident, they may still dispute the claim for hire charges.
Why do I need a solicitor?
Solicitors are instructed when the insurer and hire company are unable to come to an agreement. It may be necessary to issue court proceedings against the third party driver or insurer in order to put pressure on them to settle your claim. It is important to remember that the Solicitor is acting on your behalf and the claim is not against you, but against the at fault insurer.
Why do I need to be involved?
Ultimately this is your claim. Although you may have been involved in an accident which was no fault of your own, you have suffered a loss as a result - the cost of a hire vehicle. You may also have other losses which can be included as part of the claim.
Why don’t the insurers just pay?
Like with any claim for damages (losses), the duty is on the claimant to prove their loss. In credit hire claims in particular, the courts have set ways to assess claims and decide the appropriate amount to be paid by the at fault insurers. This is not necessarily the full amount claimed.
The defendant insurers will often instruct solicitors to defend a claim for credit hire charges, with the aim being to reduce the amount they pay by as much as possible. They will put forward a series of arguments which are supported by case law.
Every case will be decided based on its own facts, and that is why it is so important that you are involved in the claims process.
What is a 'Copley offer'?
The term ‘Copley offer’ refers to the case of Copley v Lawn [2009] EWCA Civ 580 which was heard by the Court of Appeal. These offers are also sometimes referred to as an ‘intervention offer’. Both refer to a situation where an at fault insurer offers to ‘intervene’ and arrange a replacement vehicle to the victim of a road traffic accident, often even when they are already in a credit hire vehicle. They do this as it would be cheaper for them. In the case of Copley it was decided that any such offer must meet certain criteria in order to be valid, such as:
- The correspondence should not have a threatening tone;
- The driver should be invited to pass the correspondence to their solicitor or insurer and seek their advice;
- The correspondence must contain all such information as will be relevant to the claimant and his representatives to make a reasonable response; and
- The cost to the defendant’s insurer must be outlined
If you do receive any letters from the at fault insurers, it is important to speak to the CHO or your solicitor.
What type of arguments will be raised?
Defendants will want to check a number of details before a claim is paid, such as:
- Did you have a real need to hire a vehicle?
- Did you need a like for like vehicle?
- Were you impecunious? (i.e. were you low on funds and unable to pay for hire or deal with your vehicle damage up front?)
- Was the duration of hire reasonable?
- Shouldn’t it be obvious why someone needs a vehicle?
You would think so, but, whilst the courts do accept that someone would not pay the cost of owning and running a vehicle if they did not need one, they also make it clear that each case should be considered on an individual basis and that the need for hire is not ‘self-proving’. That means you do need to give details of the various reasons why you needed to hire a vehicle. The more information you can provide, the easier it will be to overcome this (fairly minor) issue.
Why am I now being asked if things could have been done differently?
This is often frustrating for clients as any of the questions asked are hypothetical or asked in hindsight, however, it is to help your solicitor (and the courts) assess the claim for credit hire charges. Even though an accident may not have been your fault, you have a duty to “mitigate your loss”, which basically means to do what you can to ensure that any loss you suffer as a result of the accident, is kept to a minimum. For example, if you are going away on holiday, you would of course be expected to return a hire vehicle if you would not be using it.
Why am I being asked if I could afford to pay the hire charges up front?
This is a very common question in credit hire claims. This is because you will need to confirm whether you were ‘impecunious’. To be impecunious means that you did not have the funds available to go to a local hire company and pay up front for a hire vehicle (most likely at a lower cost), or to deal with your vehicle damage out of your own funds. The test for this is whether you would have suffered an ’unreasonable sacrifice’ if you had used any monies available to you. This is more complex than it sounds, so it is always best to discuss with your solicitor.
It is important to note that this question does not mean that you are now being asked to pay for the hire charges. This is another question which, although hypothetical, is relevant to the assessment of the hire charges.
Why would I pay up front if I was not at fault?
The courts expect you to keep your losses to a minimum - they will also expect you to state whether you could have afforded the cost of hire or the cost to repair or replace your vehicle. If you could, then it may be that the hire charges would have been less, and therefore only the lower sum may be awarded by the court.
What if I did not have the money?
That is helpful to your claim, as a person or company who could not afford the hire charges are entitled to claim the full rates charged. However, both the insurer and the courts will want you to prove this by providing your bank statements and other financial documents. It is very important that you do provide all documents requested, as if you only provide one of many statements, this does not allow the parties to properly assess your financial position, and a court would not be able to find that you were ‘impecunious’.
You might find that the opposing solicitors ask questions about any monies you did have, especially if you had any savings or large sums of money. It may feel a little intrusive, but the information will be used for the sole purpose of assessing your claim. The more information you give to your Solicitor, the better chance they have of successfully settling your claim.
What if I could afford to pay for hire?
That is fine too, but it does mean that the credit hire charges are likely to be reduced.
At this point, if you could afford the hire charges, the solicitor for the at-fault insurer will suggest that instead of hiring a vehicle on credit, you should have hired one at a local high street company for a cheaper rate. However, the burden of proving that lower rates were available falls on the Solicitor for the at-fault insurer. They do this by producing a basic hire rates report which details the rates of hire offered by mainstream hire companies, along with their terms and conditions of hire.
Why would I be asked whether I could have afforded to repair or replace my vehicle?
This is asked because being “impecunious” also affects the duration of the hire period – for example, if you couldn’t afford to repair or replace your vehicle, you would then have no choice but to wait to receive payment before dealing with this (or even wait until you had saved up the money you needed). However, if you were pecunious, you would have more options open to you, and then the question is whether you acted unreasonably.
That being said, if you did ask your own insurers to deal with your vehicle damage, it is unlikely that this will be considered unreasonable. Similarly, if the at fault insurer dealt with your repairs or paid you for the pre-accident value of your vehicle fairly quickly, they may struggle to argue that you should have simply paid for everything immediately.
What happens if the solicitor for the at-fault insurer doesn’t settle the claim?
The majority of claims do settle, but occasionally a court hearing will take place. This can sound daunting, but you will be advised by your solicitor, and they will instruct a barrister to represent you at court. The judge will then make a decision and that is usually the end of the case, if it even gets that far. It should be noted that credit hire companies will generally accept the judge’s decision, and would not then ask you to pay the difference. This is the nature of credit hire claims.
What if the claim fails?
We always assess claims and would only recommend proceeding to court if we feel your claim has prospects of success of 51% or more. However, in the majority of cases, the credit hire organisation will cover (indemnify) your legal costs, so long as you co-operate throughout and do not act dishonestly or fraudulently.
How can Stephensons help people who find themselves in this situation?
Given our experience with all manner of credit hire claims, for working and non-working individuals, taxi drivers, coach companies, schools, ambulance services, crane companies and construction firms, we are ideally placed to help both the accident victim and the credit hire company.
If you are concerned about a claim for credit hire charges you can call the hire company directly, or the solicitor they have appointed. They should be able to explain the process to you in full, and ease any concerns you may have.
However, if you would prefer Stephensons to assist you with your claim, feel free to contact us and we would be more than happy to liaise with the credit hire company on your behalf.
