Credit Hire Vehicles - A Cautionary Tale

lifes2short

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5,821
Hi, i have just had a court summons for the same thing, i was given a Mercedes C63 AMG for 5 weeks after my M5 was written off, the bill is 15k. Absolutely ridiculous, my lawyer still thinks it will not go to court. Fingers crossed

at the risk of sounding unsympathetic, why the heck did you not clarify things in advance, i just cannot see why anyone would accept a loan vehicle unless there is cast iron guarantee that the third party insurers cough up for it or your own insurance company
 

Felonious Crud

Administrator
Staff member
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21,013
******* bunch of wankers.

Sorry it was such a stressful faff, but I'm very pleased that decency triumphed over the money-grabbing, weaselling *****.
 

huesey1974

Member
Messages
107
at the risk of sounding unsympathetic, why the heck did you not clarify things in advance, i just cannot see why anyone would accept a loan vehicle unless there is cast iron guarantee that the third party insurers cough up for it or your own insurance company
To be honest it all went really quickly and i was still a bit shaken up from the crash, they called me, said they were sending a courtesy car out to me and that was that. I would never have questioned it anyway. They accepted full liability for the crash straight away as he hit me at 50 in the back whilst i was stationary. I wont be paying a penny so im not overly bothered. According to my lawyer this happens all the time.
 

lifes2short

Member
Messages
5,821
To be honest it all went really quickly and i was still a bit shaken up from the crash, they called me, said they were sending a courtesy car out to me and that was that. I would never have questioned it anyway. They accepted full liability for the crash straight away as he hit me at 50 in the back whilst i was stationary. I wont be paying a penny so im not overly bothered. According to my lawyer this happens all the time.

bugger me that's a pee take, who's "they" the third party insurers ?
 

Froddy

Member
Messages
1,072
To be honest it all went really quickly and i was still a bit shaken up from the crash, they called me, said they were sending a courtesy car out to me and that was that. I would never have questioned it anyway. They accepted full liability for the crash straight away as he hit me at 50 in the back whilst i was stationary. I wont be paying a penny so im not overly bothered. According to my lawyer this happens all the time.
I hope it works out for you and that the TP insurers settle ...

Credit hire is a bit of a legal minefield, and the insurance industry has spent many years trying to tackle it through countless higher court legal challenges.

The position is that you are not entitled to recover credit hire charges unless you can establish impecuniosity (i.e. that you could not have afforded to hire a replacement vehicle on “spot” rates). If the case is defended, the court will order disclosure of financial documents (accounts/wage slips and bank/credit card statements for the 3 month period prior to commencement of hire to its termination). If you cannot establish impecuniosity, only spot hire rates will be recoverable and, for this, the parties are given permission to adduce evidence of rates within the hirer’s locality at the date of hire.

It doesn’t end there, as the hirer also has to prove the need to hire, and that the duration of hire was reasonable. One trick which these unscrupulous accident management companies employ is a delayed inspection and/or repair of the damaged vehicle, which unreasonably and unnecessarily prolongs the hire period to maximise the hire charges.

It’s therefore important, if you find yourself in this position, that you are proactive in making sure that you keep your losses to a minimum - you have a legal duty to mitigate your losses. If the vehicle is written off, but you are in credit hire awaiting the pre-accident value payout, consider whether you are in a position to go ahead and purchase a replacement straightaway. The law does not expect you to make unreasonable sacrifices when it looks at the issue of impecuniosity, however what you must not do is simply sit back and wait for the payment if you have the means to take yourself out of hire.

You also need to look out for any offer of a replacement vehicle from the other side’s insurers; this is called an intervention letter. In that letter the insurers should set out what the cost of the offered vehicle would be to them, so that you can make an informed decision as to whether it would be cheaper to return your credit hire vehicle or not.

Unfortunately, what may people don’t understand is that when they enter into a credit hire agreement, they are contractually liable to discharge those charges themselves. Therefore if the charges are not recovered from the TP insurers, they are technically liable to make up any shortfall (although, in practice, the hire companies will write this off).

It’s a huge industry, worth many millions of pounds, and it would be fair to say that efforts to close it down have been wholly unsuccessful to date ....
 

makeshiftUK

Member
Messages
1,089
I hope it works out for you and that the TP insurers settle ...

Credit hire is a bit of a legal minefield, and the insurance industry has spent many years trying to tackle it through countless higher court legal challenges.

The position is that you are not entitled to recover credit hire charges unless you can establish impecuniosity (i.e. that you could not have afforded to hire a replacement vehicle on “spot” rates). If the case is defended, the court will order disclosure of financial documents (accounts/wage slips and bank/credit card statements for the 3 month period prior to commencement of hire to its termination). If you cannot establish impecuniosity, only spot hire rates will be recoverable and, for this, the parties are given permission to adduce evidence of rates within the hirer’s locality at the date of hire.

It doesn’t end there, as the hirer also has to prove the need to hire, and that the duration of hire was reasonable. One trick which these unscrupulous accident management companies employ is a delayed inspection and/or repair of the damaged vehicle, which unreasonably and unnecessarily prolongs the hire period to maximise the hire charges.

It’s therefore important, if you find yourself in this position, that you are proactive in making sure that you keep your losses to a minimum - you have a legal duty to mitigate your losses. If the vehicle is written off, but you are in credit hire awaiting the pre-accident value payout, consider whether you are in a position to go ahead and purchase a replacement straightaway. The law does not expect you to make unreasonable sacrifices when it looks at the issue of impecuniosity, however what you must not do is simply sit back and wait for the payment if you have the means to take yourself out of hire.

You also need to look out for any offer of a replacement vehicle from the other side’s insurers; this is called an intervention letter. In that letter the insurers should set out what the cost of the offered vehicle would be to them, so that you can make an informed decision as to whether it would be cheaper to return your credit hire vehicle or not.

Unfortunately, what may people don’t understand is that when they enter into a credit hire agreement, they are contractually liable to discharge those charges themselves. Therefore if the charges are not recovered from the TP insurers, they are technically liable to make up any shortfall (although, in practice, the hire companies will write this off).

It’s a huge industry, worth many millions of pounds, and it would be fair to say that efforts to close it down have been wholly unsuccessful to date ....
I couldn't put it better myself... you clearly understand this subject well. In my specific case, the arguments against our credit hire of a temporary vehicle were as follows:

  1. The need for a hire car in the first place
  2. The duration of the hire
  3. The cost of the hire
As per your post, full disclosure of our joint finances was requested - to prove that we weren't in a financial position to a hire a car ourselves. Again, I wrongly assumed that - its the 3rd party's fault for crashing into me, why should I concern myself the cost implications of this hire car, surely the 3rd party's insurer would pay regardless?

To be honest it all went really quickly and i was still a bit shaken up from the crash, they called me, said they were sending a courtesy car out to me and that was that. I would never have questioned it anyway. They accepted full liability for the crash straight away as he hit me at 50 in the back whilst i was stationary. I wont be paying a penny so im not overly bothered. According to my lawyer this happens all the time.
There seem to be a lot of parallels with your experience and mine - and I sincerely hope that things are settled outside of court for you, like they did for me. It sounds like you have the same credit hire indemnity insurance I was provided as a function of taking the hire car, and so long as you're demonstrating compliance (and attend court if the court date does indeed go ahead) then you won't be liable for any costs incurred.
 
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makeshiftUK

Member
Messages
1,089
I had a luck escape in similar scenario.
My safely parked 3200 was smashed into by reversing jeep. The other party insurer offered to deal with the whole claim, assuring me that any contact with my insurer was managed by them. LUCKY DAY
I could have managed without own car, but as ^^^ we always have car each. I played hardball when they offered like for like car which was entertaining to me (what is 'like' an exclusive 4 seat V8 sports coupe). Eventually stopped short of insisting they give me the 911 run by hire company Director (no maserati in stock). (had 911 3.2 at the time). They sent flashy Merc 4 seat convertible which I hated but girls loved.

My 3200 was in the shop for 7-8 weeks, think the day cost was around £500. thank god this was not on my insurance it might have written off the 3200.

My opinion? Insurance companies all invest / gamble our premiums to make profits. They are largely equally good at this so need a route to get ahead of the pack. One method is to do their utmost to load costs onto their competitors. Huge hire car cost when 'someone else at fault' will make a nice dent in P&L of competitor. No wonder so many are offered hire cars.
My manager once told me he had a customer that was one of these credit hire vehicle companies... upon taking a tour of the customer's premises, he was gobsmacked to find a warehouse laden with all types of automotive exotica, all featuring little more than delivery miles on the clock. These cars are intended to serve the purpose of credit hire vehicles if a prestige car owner were to have an accident/find themselves in a similar situation to mine... cue the extortionate hire rates and the subsequent legal battles etc. etc. It feels like this practice and industry operates a bit like 'the wild west'.
nice to hear all sorted, however, you do need to be switched on with these things otherwise you will get shafted somewhere along the line by these snakes in the grass, love the E39 M Sports (petrol) , had a couple in the past with the sat nav screens, fabulous machines and in fact i'm looking to buy a nice example for the stable, future classic, bit of a shame you couldn't get yours repaired without being a write off
I 100% agree, I think the E39 M sports is the best looking 5 series out there... I may not have explained my story very well, but I did buy my BMW back, get it repaired, and she's still with us today :) The M54B30 straight-six under the hood ticked over 217k miles recently, and before I die I'd very very much like to own/drive an E39 M5.
 

huesey1974

Member
Messages
107
My manager once told me he had a customer that was one of these credit hire vehicle companies... upon taking a tour of the customer's premises, he was gobsmacked to find a warehouse laden with all types of automotive exotica, all featuring little more than delivery miles on the clock. These cars are intended to serve the purpose of credit hire vehicles if a prestige car owner were to have an accident/find themselves in a similar situation to mine... cue the extortionate hire rates and the subsequent legal battles etc. etc. It feels like this practice and industry operates a bit like 'the wild west'.

I 100% agree, I think the E39 M sports is the best looking 5 series out there... I may not have explained my story very well, but I did buy my BMW back, get it repaired, and she's still with us today :) The M54B30 straight-six under the hood ticked over 217k miles recently, and before I die I'd very very much like to own/drive an E39 M5.
Hi,
I had an E39 M5, fantastic machine and had it 4.5 years which for me is a long time. Sold it for buttons and look at the prices now!!
 

philw696

Member
Messages
25,120
I remember when they were buttons too but still 5 times more than what I sold my E39 Sport for.