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One of my customers, Zamir Hussain, has rather bizarrely found himself in court following an accident that wasn’t his fault. He was provided with a like for like replacement car (not cheap considering he has a Range Rover) but after the other driver’s insurance company disagreed with the amount claimed for the hire car he now has to go to court.

He could end up having to pay all or part of the bill which is several thousands of pounds and serves as a stark warning to anyone involved in an accident. The situation requires a little unravelling so please bear with me. You’ve had an accident that wasn’t your fault and your car is booked in for repair. There is no dispute that the other party is at fault.

You now have one of two choices, you can claim through your insurance company which means that you lose your no claims discount or you can make the claim yourself against the other party. However, and this is the first point to note, you must advise your insurance company that you have been involved in an accident. Failure to do so could cause your insurer to refuse to insure you in future. You should send a letter to your insurance company making it perfectly clear that you are not making a claim, simply advising them.

So you have advised your insurance company and you are now faced with another choice. The bodyshop repairing your car may offer you a courtesy car. This is exactly what it is, a courtesy provided by the repairer, which tends to be a small engine’d modest car to keep you mobile. On the other hand your insurer may suggest that you take a like for like car and recommend a credit hire company who will provide you with a car, either the same as the one you drive or a similar grade. By taking this route you don’t lose your no-claims bonus but the car rental is in your name.

The agreement between you and the credit hire company includes payment terms. They will seek to recover the cost from the other party’s insurance company but, and this is a big but, if the other insurance company refuses to accept liability for the accident or for any other reason refuses to pay, you are liable as the agreement is in your name.  Whilst you may feel you have a right to expect a like for like replacement there is an overriding obligation on you to mitigate the costs to the other party (and his insurer) in the event of an accident.

For example if you have an accident that wasn’t your fault and you feel your car is driveable, then instead of having the car checked by an engineer you continue to drive it, you could cause additional damage. If subsequently it is found that you have caused irreparable damage to the engine the other person’s insurance company would most certainly challenge a claim for a replacement engine – and probably win.

It seems that some insurance companies are challenging hire costs, not because they are too high for the car but that a direct replacement shouldn’t have been provided in the first place using the mitigation of cost argument for the challenge. They will also challenge a rental charge for a replacement car if you keep the hire car after your car has been repaired. You may stand a better chance of your claim succeeding if you lease your car. You should point out that you are still paying for the lease of your car whilst it is being repaired so you should be entitled to claim for a like for like replacement.

Some Credit Hire companies also provide a total risk agreement whereby, unless you have deliberately tried to defraud them, they will cover the cost in the event that they end up in court and lose the case. You need to check beforehand. It now starts to get a little messy. If you end up in court you may be asked if a courtesy car was offered and why you didn’t accept it. The advice is that you should tell the credit hire company if you are offered a courtesy car (you may be asked in court why it was essential to have a like for like car as opposed to a small courtesy car).

If you are not able to use the hire car during the period that your car is being repaired, for example if you are on holiday or you are unable to drive through injury or illness then the claim for that period could be thrown out. Here is another strange twist. Credit hire is known to be the most expensive way to finance a rental car. If you walked into a daily rental company and rented the same car it could cost up to £200 less per day but to do this you would be expected to pay in advance for the rental.

So as the accident wasn’t your fault why would you take this route, surely it must be down to the other party’s insurance company to pay the rental costs direct? Wrong. If it can be shown in court that that you had the resources to pay for the replacement car at the lower rate the court could find in favour of the insurance company for the difference. And it gets worse, supposing the car was a write off. How long would you be entitled to a Credit Hire car for? Most would assume from the time you had the accident to the time you receive the payout.

Some might argue, but not be successfully, that you need the hire car to drive around to inspect potential replacement cars. However, again, rather bizarrely, if it can be shown that you could have afforded to pay for a replacement you may not be entitled to claim for more than say a ‘reasonable’ 2 weeks. The expression used by the courts is ‘impecunious’ when you don’t have the funds to pay for a replacement in the case of a write off or pay for cheaper daily rental if your car is being repaired. So beware if you have a few quid in the bank.

Finally, there is the ‘upsell’. Only ever consider an upsell if the Credit Hire company doesn’t have a direct replacement and won’t charge a higher rate for the better car. Let’s say your car is a 3 Series BMW but because the Credit Hire company has no 3 Series available they suggest they provide a 5 Series. Check that they will still charge the 3 Series rate and don’t fall for the supplier saying that you don’t have to worry if the rate is higher as the other party’s insurance company will be paying.

They probably won’t. In summary only take a Credit Hire car if you are absolutely confident that it won’t result in you paying all or part of the bill. For your information you can check Nationwide Credit Hire Rates by clicking here. Incidentally to put this into perspective Zamir’s Credit Hire charge was over £6,000!!! By Graham Hill