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Is it Credit Hire?


If you’ve been involved in a road traffic incident that wasn’t your fault it’s likely that your vehicle will have sustained damage as a result of the impact.  Whilst your vehicle is being repaired, or you await payment of the value of your vehicle from your insurer, you may be without the use of an alternative vehicle.  Some insurance policies will provide a courtesy vehicle.  This means the cost of hiring the vehicle to you is borne by your insurer.  They will pay the hire company for the vehicle and then look to recover this cost from the at fault party. 

However, with many polices these days the right to a courtesy vehicle is an optional extra which many of us do not add to our policy.  If you aren’t entitled to a courtesy vehicle then you may be given the option of using a credit hire vehicle.  Your insurer may direct you to the credit hire company or the credit hire company may contact you directly.  It’s important to understand whether you’ve signed up to a credit hire agreement as ultimately you’re responsible for the costs of hire if this cannot be recovered from the at fault party. 

A credit hire company will supply you with a like for like replacement vehicle on a credit basis. You’ll be provided with a credit hire agreement to sign together with a mitigation statement, which confirms your need for a replacement vehicle.   You’ll also be given a period of 14 days to cancel the agreement and you’ll be provided with a specific document to enable you to do so.   By signing the credit hire agreement you’re not only agreeing to hire a vehicle but you’re agreeing to assist the credit hire company with the recovery of their charges.   Ultimately you’ll be responsible for the cost of the credit hire if the hire company cannot recover this from the at fault party. 

Due to the very nature of the hire being supplied on credit with no up front payment required the cost of the hire is significantly more than hiring a vehicle directly.  This can cause issues with recoverability for the credit hire company.  It’s therefore possible that you could be contacted many months, even years, after the hire took place and asked to co-operate with the hire company to recover the outstanding hire costs.  This could mean having to attend Court.

As long as you’re aware of what you’re signing up to then obtaining a hire vehicle on a credit basis can be the best way of continuing with your day to day activities whilst your own vehicle is unavailable and you don’t have the provision of a courtesy vehicle.

Please consider the following:

  1. Check your own insurance policy documents – are you entitled to a courtesy car?
  2. If you’re contacted by a company to provide you with a hire car, ask them on what basis they’re hiring a vehicle to you
  3. Have you been provided with a credit hire agreement, a mitigation statement and a Right to cancel within 14 days form?  If so this will be a credit hire vehicle 
  4. Read all of the paperwork so you know what you’re signing up to
  5. Be prepared to assist the credit hire company with recovery of the hire charges if necessary

If you have any queries in relation to credit hire please contact us.

Posted on Feb 1st, 2021 by Anthony Heywood

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