Credit hire FAQs
What is credit hire?
Simply put, credit hire is a situation involving a contractual agreement for the hirer to provide the customer with a replacement vehicle on a “credit” basis usually following a road traffic collision.
Is a credit hire vehicle like a courtesy car?
That’s a common assumption most people would make and understandably so, but, no, a credit hire vehicle is not a courtesy car.
But if I had a courtesy car on my insurance policy? Is that not the same thing?
It’s not, no but let’s expand on that example a little bit.
Let’s pretend you’ve been involved in a road traffic collision – not to wish that on you.
You need a vehicle, you want to get back on the road again and so you ring your insurance company. In this case, you thought maybe you had a courtesy car on your policy and perhaps you might have.
Your insurance company tell you not to worry and they will arrange a replacement vehicle right away. You then get a phone call from another company, you sign something and the replacement vehicle arrives.
Eventually, your own car is repaired or you get money to buy a new one, and everything seems back to normal.
A few months or even a year later, you get a call from a hire company saying they are struggling to get their costs back following your accident and need your help. A letter might even land on your door step from a solicitor and you might start to panic…
So, what was it that I signed? The credit hire agreement you mentioned earlier?
Yes, that’s right. You have signed a contract which 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.
Now, of course this may differ depending on the hire company, but generally, the contract you signed does make you liable for those credit hire charges ….
But the accident wasn’t my fault?
That’s honestly one of the things I hear the most.
You have to remember that the issue of who was at fault for the accident is a separate hurdle to that of the recovery of the hire charges.
Also, and perhaps more importantly, you have just signed a contract to agree to these terms regardless of whether you read that document or not.
Now, somewhere else in those terms, it might say something along the lines of; in exchange for your co-operation and as long as you are not found to be fraudulent, the hire company agrees to pursue the outstanding sums from the at-fault insurer.
There’s also probably a term in the credit hire agreement you signed that any claim would be pursued in your name and so really, you have to think of this as your loss, something you want to recover.
And this is why a solicitor would get involved?
That’s right, I’ve acted for a countless number of clients in credit hire claims over the past 10 years and, in dealing with this on daily basis, the best bit of advice I would give to a client would be to just ring your solicitor and discuss the matter with them.
Working together, and as long as you co-operate throughout the claim, your solicitor should be able to reach a settlement that both you and the hire company are happy with.
With my co-operation? What exactly does that mean?
In bringing a claim for recovery of credit hire charges, the at-fault insurer will then appoint their own solicitor who will attempt to have the hire charges reduced.
But how could they do that?
In all cases, the solicitor for the at-fault insurer will put forward a series of arguments which, in actual fact are supported by caselaw that’s set a precedent in these types of claims.
Now, each case will face it’s own arguments depending on the circumstances, but there are a number of arguments that are advanced equally in all claims I have seen.
What type of arguments could someone expect to see in that situation?
The at-fault solicitor will firstly question your need for the vehicle as well as your need for that specific vehicle. For example, you had a BMW 5 Series and you hired a comparable BMW 5 Series, instead of a smaller vehicle, like a Corsa let’s say.
Shouldn’t it be obvious why someone needs a vehicle?
It should be and whilst the Courts do accept that someone would not pay the cost of owning and running a vehicle if you 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.
So, let me spin this around to ask you a question, why do you need your vehicle?
Well, to travel to work and for social reasons.
That makes sense but the Courts expect a more in-depth answer. So, do you have children? Do you have any hobbies or events you would attend in a normal year, forgetting the pandemic for one minute? Do you use your vehicle to travel with work? Why did you need that precise vehicle? Basically, the more information you can provide, the easier a job your solicitor will have.
I see, so what other arguments should be expected?
The solicitor for the at-fault insurer might then challenge such points as the duration of the hire period, they might say it was far too long and even go on to suggest that you could have helped to make it shorter.
How could I have helped?
Of course it depends on the actual circumstances of the claim but courts will expect you to “mitigate your loss”, basically do what you can to ensure that any loss you suffer resulting from the accident is kept to a minimum.
So, keeping this in mind, you might want to ring the garage at least once a week to check on those repairs or if you’re being paid a sum of money because your vehicle is a total loss, you might want to make sure you stay in touch with your insurer and respond to them as quickly as possible whenever they need something from you.
Like I said it depends on the circumstances of the case but the more you can do to assist and make that hire period shorter, the better chance your solicitor will have of recovering those charges later.
What else would the at-fault insurer’s solicitor ask?
One of the main arguments faced is the question “Could you afford the cost of hire or the cost to repair / replace your vehicle….”
Why would I want to do that when the accident wasn’t my fault?
Okay, remember that 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. This is known as impecuniosity, a term not often used but means to have little or no money.
In credit hire claims, both the court and solicitor for the at-fault insurer will challenge you on whether you could have afforded the cost to hire or repair / replace your vehicle.
Okay, let’s say I didn’t have the money available to pay for hire…
That’s good news in reality as a person or company who could not afford the hire charges are entitled to claim the rate charged. However, both the Defendants and the solicitor for the at-fault insurer will want you to prove this by providing your bank statements.
You might find that the opposing solicitor attempts to challenge your accounts, especially if you have any savings or large sums of money. It may feel a little intrusive but, again, like I said before, the more information you give your solicitor, the better chance they have of successfully settling your claim.
What if I could afford to pay for hire?
Right, so that doesn’t mean you should have paid at the time or should now pay, it simply allows the parties to narrow the issues which are in dispute.
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 found one from a high street company for a cheaper rate and instead used that company. However, the burden of proof then falls on the solicitor for the at-fault insurer to prove that there exists a cheaper rate (for which they will produce a Basic Hire Rates report).
You mentioned whether I could afford to repair or replace my vehicle? Why do they ask that?
They ask this 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 for your insurance company or even the at-fault insurer.
If you did have the money, you might find yourself being questioned on why you didn’t just pay for your repairs yourself.
What happens if the solicitor for the at-fault insurer doesn’t settle the claim?
I’d say in 9 out of 10 cases of mine, I am usually able to settle the claim without the need to go to a final hearing. On the rare occasion the matter goes to Court, as daunting as that may sound, I would just say keep calm, speak with your solicitor and they will give you input how what to do.
In any event, your solicitor will instruct a Barrister to attend Court with you and, at the end of the day, the Judge will make a decision and that is usually the end of the case, if even gets that far.
How can Stephensons help people who find themselves in this situation?
Given our experience with all manner of clients, from working and non-working individuals, to taxi drivers, to coach companies, schools, ambulance services, crane companies, all manner of construction firms, I feel we are ideally placed to help both the accident victim and the credit hire company.
I do often get calls from customers of hire companies concerned about their claim but, in that situation, I would suggest they just ring the hire company first or the solicitor they have appointed, as it is likely they will be able to explain the process to you.
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.