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Replacement vehicle: why am I being asked about my finances at the time of the accident?

You’ve been involved in an accident and you need a replacement vehicle.  You contact your insurance company, who put you in touch with another company.  You sign some forms and a replacement vehicle that’s a similar make and model to your own is provided.

Unfortunately, you were also injured in the accident and you’re now pursuing a claim for compensation. Your solicitor has got all the evidence they need to support your claim but the other side won’t make reasonable offers and you’ve been advised that the next step is to issue court proceedings.

The next thing you know, your claim has been transferred to our specialist team at Lyons Davidson because the credit hire company hasn’t recovered its outlay.  You get a questionnaire from us asking you about your vehicle and your financial situation at the time of the accident.

You may or may not have been fully aware that you had, in fact, signed up for a credit hire vehicle rather than a replacement or courtesy vehicle under the terms of your insurance policy.  But – whether you were aware or not – if you signed the documents then you’ll need to co-operate with us and the credit hire company to ensure we maximise recovery of their outlay.

As with anything taken out on a credit basis, the cost will be more than if you’d paid for up front.  You may think the cost of the hire seems unreasonable but this will be for a judge to determine.  Part of the judge’s decision will be based on whether you would have had the money to pay for a hire vehicle in advance at the time of the accident without making unreasonable sacrifices.  This is a hypothetical question and doesn’t mean you would have actually paid for the hire vehicle out of your own pocket. If you would have been able to pay for the hire vehicle, this means the credit hire company will have to accept a lower amount for their outlay.

If you weren’t in a position to pay for a hire vehicle up front, then you the judge will say that you were ‘impecunious’ (i.e. you had little or no money ) at the time of hire.  This means the credit hire company should be able to claim the full cost of the credit hire, as long as it isn’t an unreasonable amount.  We’ll look into factors surrounding reasonableness in another article at a later date.

If you were ‘impecunious’, then we’ll need to give evidence of this to the judge, so that they are satisfied that the full cost of the credit hire should be awarded. This is why you’ll be asked to send us documents showing your financial position before and throughout the duration of the hire.  This evidence will consist of proof of your earnings for the three months before the accident and covering the duration of the hire. You’ll also need to show what you had in your bank accounts – including joint accounts and whether you had access to any credit cards. Again, these statements will need to cover the three months leading up to the accident and the hire period itself.

If you have any questions regarding credit hire please contact Senior Associate Victoria Priestley by emailing [email protected] or calling 0117 904 7706.

Posted on May 21st, 2019 by Lyons Davidson