The Pitfalls of Credit Hire

Holt v Allianz Insurance Plc (2023) EWHC 790

If a client is involved in a non-fault incident they may be offered, or wish to use, the services of a credit hire provider. If the credit hire provider feels the client is not at fault, they will agree to supply a vehicle. The provider will then seek to recover the cost of the hire from the insurer of the party thought to be at fault.

The client will be asked to sign a credit agreement. It is very important for the client to read and understand the agreement as they, ultimately, are liable for the costs.

A third-party insurer will look at two things in particular –

1. The length of the hire
2. The cost of the hire

If the length of the hire is agreed the third-party insurer will then look at the costs of hire – or quantum. If the credit hire company are unable to recover the costs from the other insurer or if the client isn’t 100% successful in their claim against the third-party, the client will be asked to settle either the full cost or the portion that was not met. Credit hire is not dissimilar to a loan where the vehicle is being “loaned” to the client.

Third-party insurers, or our own panel of insurers, generally will argue the quantum aspect and it is rare for the credit hire costs to be immediately settled in full and without issue. From a client’s perspective, if they are the one using the credit hire, this can be an inconvenience, as they are bound by the agreement to assist the credit hire, and or their agents (solicitor) in the recovery process. This could lead to the client faced with excessive paperwork to deal with and could result in the client (and this is not necessarily the driver but the Finance Manager or Senior Board Director) attending court to assist in the recovery.

From the perspective being the “at-fault” party and the third-party making a credit hire claim against the client, it is welcoming that insurers do argue and dispute the costs of these claims as they can be significant. Credit hire costs can have an impact against a client’s insurance spend when facing renewal and is always difficult for a broker to justify to the client.  

Insurers are pushing back when presented with credit hire claims and seeking proof that the individual or firm generally had need for a vehicle. The current leading case on this is Holt v Allianz Insurance Plc (2023) EWHC 790.  In this case, The High Court ruled that where a claimant is claiming for credit hire following a Road Traffic Accident, they should have to disclose basic financial information upon a reasonable request – basically, if you could afford to hire why did you use credit hire.

For further information and advice regarding Road Traffic Accident claims, please contact our specialist claims team.