So what's credit hire? It's when a hire vehicle is provided, but rather than paying up front for hire costs, the company supplying the hire vehicle provides credit for the charges being accrued.

The company then seeks to recover its costs direct from the insurer of the person at fault for the accident. So in most cases, the individual who had the hire car never pays the bill.

This all sounds simple enough. As consumers we've grown used to making purchases on credit, and in many cases innocent victims of road traffic accidents don't see why they should be out of pocket. In this sense, credit hire can provide an extremely useful service.

However, it's very important to remember that, as with any credit arrangement, when you sign it you become personally liable for the charges incurred.

FAQs

How do I know if my replacement vehicle is in fact a credit hire?

There's sometimes confusion on the part of our clients about whether or not they were provided with a credit hire vehicle. There are various ways in which replacement vehicles can be provided, including:

• courtesy cars provided under the terms of the person's own insurance policy
• courtesy cars provided by the repairing garage
• replacement vehicles which are arranged and paid for directly by the insurers of the person at fault for the accident

When you take delivery of a replacement vehicle, it's important to ask exactly who is providing it and whether you're potentially agreeing to be liable for the hire costs.

If there's any doubt, you can speak to your solicitors, your own motor insurer, the other party's insurer and/or the repairing garage for clarification.

Are the hire charges the same as if I was paying for it myself?

As a general rule, the daily hire rates charged by credit hire companies are higher than those charged by traditional hire companies, which require payment of their costs directly. This is one of the main reasons why the insurance industry has for many years taken a generally tough stance when faced with claims for credit hire charges. 

Ultimately, might I have to pay the hire charges?

The hire car is provided on a credit basis, and so payment is not due immediately. Most credit hire companies will make every effort possible to recover their costs from the insurer of the party at fault. But as with any credit agreement, you're strictly liable for the costs incurred.  Whether the credit hire company would actually pursue you for unrecovered charges will vary depending on the circumstances of the case, and also from one company to the next. You should always be aware, however, that they're entitled to pursue you if they can't recover their costs.

Am I responsible for ensuring the hire period isn't too long?

Yes. Whilst the hire company, the insurer and the repairing garage all have obligations to ensure you're not in the hire vehicle for longer than necessary, you also have a role to play.  You mustn't delay in:

• responding to requests for information
• reporting the accident to your insurer
• collecting your vehicle once repairs are complete
• liaising with your insurer if they're writing your vehicle off, to ensure payment is made promptly

Any delays you cause may lead to extra hire charges being incurred which can't be recovered from the insurer of the party at fault. The credit hire company is then entitled to look to you for payment of its unrecovered costs.

Can I hire a like-for-like replacement vehicle?

The relevant legal principle here is that the negligent party is under a duty to put the claimant back in the position they were in before the accident. It's therefore quite reasonable to expect to be able to hire a like-for-like vehicle.

However, commonsense should also be applied. If someone was driving a prestige vehicle – BMW, Porsche, Aston Martin for example – but had no specific need for a like-for-like replacement, it may be wise to hire something less expensive. It'll usually be for a relatively short period and a perfectly reasonable replacement can often be found at much lower cost.  Equally, if there's a specific need – maybe for business purposes where a prestige vehicle is part of a corporate image – then a like-for-like vehicle can be justified. Each case must be viewed on its own merits and you should discuss this with the credit hire company and your solicitors if in any doubt.

Can I still hire a vehicle if I have an alternative vehicle available that's free?

Every claimant is under a common law duty to keep their losses to a minimum. So if you're able to use another vehicle – a family member's for example – at no cost, you should not hire a vehicle, as those costs may well be unrecoverable. 

Other information

Many credit hire companies work closely with motor insurers to try to minimise the number of claims where disputes arise over the amount being charged. There's a set of guidelines governing the rates that can be claimed and how the 'reasonable' hire periods can be calculated.

Unfortunately, there are still a number of credit hire claims where agreement cannot be reached. In these cases it is not uncommon for court proceedings to become necessary, and if this is the case you'll be required to co-operate, provide information and possibly even attend court to give evidence on a range of issues such as:

• whether you could have afforded to have paid for a hire vehicle yourself rather than using the services of a credit hire company
• whether the period of hire was reasonable
• whether you were properly informed of the nature of the credit agreement

If court proceedings are necessary, and if you don't already have legal representation, the credit hire company will normally appoint specialist solicitors to deal with the court process on your behalf.  Most credit hire companies will also underwrite the costs of the proceedings if no other funding is available, so that the costs won't fall to you.

A large number of credit hire companies are able to offer fast delivery of replacement vehicles, and will often deliver to, and collect from, the location of your choice.

You'll be required to sign a hire agreement and a credit agreement (sometimes combined).

What should you do if you have any questions or concerns?

At Access Legal from Shoosmiths we have a great deal of experience in dealing with credit hire claims and can advise you on all aspects of the process. Please feel free to contact us by any of the available methods for further information.

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All documents should be read and used in accordance with the terms and conditions. This document is for your general information only and is not a detailed statement of the law. It is provided to you free of charge and should not be used as a substitute for specific legal advice. If you require specific legal advice please contact our helpline on 03700 86 86 86.

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