Credit hire refers to a type of car rental service offered by car rental companies in the United Kingdom (UK) to individuals who have been involved in an accident that was not their fault, and their vehicle is deemed unroadworthy or requires repairs. This type of service is designed to provide a temporary vehicle to the affected individual while their car is being repaired or replaced.
Understanding Credit Hire
Credit hire is a type of hire agreement where the driver does not pay for the rental upfront but instead pays for it through their insurance policy. In a credit hire agreement, the car rental company provides a replacement vehicle to the claimant, who is usually the innocent party in an accident, while their vehicle is being repaired or replaced. The cost of the rental is then recovered from the at-fault party’s insurance company through a credit hire claim.
The credit hire process involves several steps:
The claimant informs their insurance company of the accident and requests a replacement vehicle.
The insurance company arranges for a rental car to be provided to the claimant through a credit hire agreement.
The claimant is responsible for the use and maintenance of the rental vehicle, including fuel, insurance, and any additional costs such as toll charges.
The insurance company or the rental company submits a credit hire claim to the at-fault party’s insurance company, seeking reimbursement for the cost of the rental.
The at-fault party’s insurance company reviews the claim and either accepts or disputes it.
The Benefits of Credit Hire
Credit hire offers several benefits to claimants, including:
Convenience: Credit hire provides a replacement vehicle for the claimant, allowing them to continue with their daily activities and maintain their mobility while their vehicle is being repaired.
Reduced stress: Having a replacement vehicle eliminates the stress and inconvenience of trying to arrange alternative transportation while waiting for repairs to be completed.
Time-saving: With credit hire, the claimant does not have to spend time searching for a rental vehicle, as the insurance company arranges everything for them.
Financial benefits: In some cases, credit hire can be more cost-effective than paying for a rental vehicle upfront. The cost of the rental is usually covered by the at-fault party’s insurance company, and the claimant does not have to pay out of pocket.
When to Choose Credit Hire
Credit hire is an ideal solution for individuals who have been involved in an accident that was not their fault and require a temporary vehicle while their own vehicle is being repaired or replaced. The following situations are particularly suited to credit hire:
The claimant’s vehicle is deemed unroadworthy or unsafe to drive.
The repairs to the claimant’s vehicle will take an extended period of time.
The claimant requires a replacement vehicle to maintain their daily activities and mobility.
The claimant’s insurance policy includes credit hire coverage.
Understanding the Costs of Credit Hire
The cost of credit hire can vary depending on the rental company, the type of vehicle, and the duration of the rental. Generally, the cost of credit hire is calculated based on the following factors:
Daily rate: The daily rate for a credit hire vehicle can range from around £30 to £100 or more, depending on the type of vehicle and the rental company.
Mileage allowance: Most rental companies provide a certain mileage allowance as part of the credit hire agreement. The mileage rate can vary, with some companies charging up to 50p per mile for mileage above the allowance.
Insurance: The rental company will typically provide insurance coverage for the credit hire vehicle. The cost of this insurance is usually included in the daily rate.
Fuel: The claimant is responsible for fuel costs while using the credit hire vehicle.
Additional costs: The rental company may charge additional costs for optional extras such as satellite navigation systems, child seats, or additional drivers.
It’s important to note that the cost of credit hire is usually covered by the at-fault party’s insurance company, and the claimant should not be responsible for any out-of-pocket expenses. However, if the at-fault party’s insurance company disputes the credit hire claim, the claimant may be left to cover the cost themselves.
The Role of Insurance in Credit Hire
Insurance plays a crucial role in the credit hire process. Most insurance policies include some form of credit hire coverage, although the specifics of the coverage can vary. It’s important to understand the terms of your insurance policy to determine what is covered and what is not.
When an accident occurs, the claimant should inform their insurance company immediately and request a replacement vehicle. The insurance company will then arrange for a credit hire vehicle to be provided to the claimant. In some cases, the claimant may be required to pay for the rental upfront, but this cost will usually be reimbursed as part of the credit hire claim.
If the at-fault party’s insurance company disputes the credit hire claim, the claimant’s insurance company may become involved in the dispute resolution process. The claimant’s insurance company will work to ensure that the cost of the credit hire vehicle is covered by the at-fault party’s insurance company.
The Legal Framework for Credit Hire
Credit hire is governed by UK law, specifically the Road Traffic Act 1988 and the Hire of Cars and Light Commercial Vehicles (Coronavirus) (Amendment) (No. 4) Regulations 2020. These regulations provide a legal framework for credit hire claims and set out the requirements for rental companies and insurance companies to follow.
Under the Road Traffic Act 1988, the claimant must have a reasonable requirement for a replacement vehicle, and the hire must be for a legitimate purpose. The rental company must also provide a vehicle that is suitable for the purpose for which it is being used.
The Hire of Cars and Light Commercial Vehicles (Coronavirus) (Amendment) (No. 4) Regulations 2020 provide temporary relief to rental companies and insurance companies in relation to credit hire claims during the COVID-19 pandemic. These regulations allow rental companies to provide credit hire vehicles for longer periods than usual, and they also provide protection for rental companies from liability for certain damages to the credit hire vehicle.
The Dispute Resolution Process
If the at-fault party’s insurance company disputes the credit hire claim, the claimant and their insurance company may need to engage in a dispute resolution process. The dispute resolution process can involve a variety of methods, including negotiation, mediation, and arbitration.
In some cases, the claimant’s insurance company may use a third-party dispute resolution service to resolve the dispute. These services can help to facilitate a fair and efficient resolution to credit hire disputes.
The dispute resolution process can be complex and time-consuming, and it’s important to have a clear understanding of the legal and financial implications before engaging in a dispute. It’s advisable to seek legal advice from a qualified solicitor to ensure that your interests are protected throughout the process.
Tips for Successful Credit Hire Claims
To ensure a successful credit hire claim, it’s important to follow these tips:
Document the accident: It’s crucial to gather as much information as possible about the accident, including the details of the other driver, witness statements, and any photographs or video evidence.
Report the accident to your insurance company immediately: Inform your insurance company as soon as possible after the accident, and request a replacement vehicle.
Cooperate with the rental company: Make sure to comply with the terms and conditions of the credit hire agreement, and communicate any issues or concerns with the rental company in a timely manner.
Keep all receipts and invoices: Save all receipts and invoices related to the rental, including fuel, mileage, and insurance. These records will be needed to support the credit hire claim.
Understand your insurance policy: Make sure you understand your insurance policy, including what is covered and what is not. This will help you to identify any potential issues or challenges that may arise during the credit hire process.
Seek legal advice: If you are involved in a dispute with the at-fault party’s insurance company, it’s advisable to seek legal advice from a qualified solicitor. A solicitor can help you navigate the dispute resolution process, negotiate with the other parties, and represent you in any legal proceedings.
Keep detailed records: Maintain detailed records of all communication and correspondence with the rental company, insurance companies, and other parties involved in the credit hire process. This documentation can be crucial in supporting your claim and resolving any disputes.
Be aware of time limits: There may be time limits for making a credit hire claim or appealing a decision. It’s important to be aware of these time limits and to act within them to ensure that your rights are protected.
Be vigilant: Stay vigilant throughout the credit hire process, and be proactive in addressing any issues or concerns as they arise. This will help to ensure that your credit hire claim is processed efficiently and effectively.
Conclusion
Credit hire is a critical aspect of personal injury claims in the UK, providing claimants with a replacement vehicle while their own vehicle is being repaired. Understanding the basics of credit hire, including the rental process, the role of insurance, the legal framework, and the dispute resolution process, is crucial for ensuring a successful credit hire claim.
By following the tips outlined in this guide, claimants can navigate the credit hire process with confidence, ensuring that they receive the compensation they are entitled to. Remember to document the accident, report it to your insurance company promptly, cooperate with the rental company, keep records of all expenses, understand your insurance policy, and seek legal advice if necessary.
If you are involved in a personal injury claim and have questions about credit hire, contact a qualified solicitor for guidance and support. They will be able to help you navigate the process, negotiate with the other parties, and ensure that your rights are protected.
With a comprehensive understanding of credit hire and the steps required for a successful claim, you can ensure that you receive the compensation you deserve and return to your daily routine as quickly as possible.