Understanding Credit Hire
Credit hire involves a company providing a temporary replacement vehicle to an individual involved in a non-fault accident. The company funds the hire while the individual’s vehicle is being repaired and subsequently seeks reimbursement from the at-fault driver’s insurance provider.
Additionally, some credit hire companies offer credit repair services. Subject to terms and conditions, they arrange and finance repairs for the damaged vehicle, aiming to recover the costs from the at-fault driver’s insurer.
Who Covers the Credit Hire Costs if the Claim Is Denied?
In the UK, if a credit hire claim is unsuccessful, the individual who hired the replacement vehicle is responsible for the associated charges. This outcome can occur under several circumstances:
- Liability Dispute – If the at-fault driver’s insurer disputes responsibility for the accident, they may refuse to cover the hire costs.
- Excessive Hire Rates – If the credit hire company’s rates are deemed excessive or the necessity of the replacement vehicle is questioned, the claim may be denied.
- Total Loss Vehicle – If the vehicle is declared a total loss and the claim process is delayed, hire charges can accumulate. If the claim isn’t resolved, the hirer is liable for these costs.
Financial Responsibility
The credit hire agreement is a contract between the hirer and the credit hire company. Therefore, if the associated insurance claim is unsuccessful, the hirer is directly responsible for the hire charges. These agreements often stipulate that the hirer must cover costs if the insurance claim does not succeed, regardless of the accident’s circumstances. Failure to settle outstanding amounts can result in legal action and negatively impact the hirer’s credit rating.
Risks Associated with Credit Hire Services
It is essential to:
- Conduct Thorough Research – Fully understand the financial obligations outlined in the credit hire agreement before signing.
- Negotiate Terms and Conditions – Discuss responsibilities in the event of an unsuccessful claim with the credit hire company.
- Seek Legal Guidance – Consulting a solicitor or claims management company can clarify responsibilities and potential legal implications.
Terms of Credit Hire Agreements
Credit hire agreements are regulated under the Consumer Credit Act 1974. Key points include:
- Liability – The hirer is responsible for hire charges under the agreement, even if the credit hire company successfully recovers costs from the at-fault driver’s insurer.
- Agreement Validity – Enforceability depends on the terms presented and whether the hirer fully understood their obligations.
- Cost Recovery – The hire company will attempt to recover charges from the at-fault driver’s insurer. If unsuccessful, the hirer remains liable.
- Duty to Mitigate Losses – The hirer must take reasonable steps to minimize hire costs and related expenses.
Choosing a Reliable Credit Hire Provider
When selecting a credit hire company:
- Research Providers – Choose companies with positive reviews and a strong customer service record.
- Understand the Hire Agreement – Carefully review terms, including hire duration, fees, and responsibilities.
- Consider Hire Duration – Determine how long you will need a replacement vehicle, as some companies offer short- and long-term options.
