Credit Hire Explained

Your own insurer may be able to provide a courtesy vehicle under your policy, but the type of vehicle and terms available will depend on your insurance cover.

Credit hire operates differently because the replacement is provided as part of the losses arising from the non-fault accident rather than simply under the courtesy-car provision of your own policy.

This can be particularly relevant where you require a specific type of replacement vehicle, such as a larger family car, prestige vehicle, licensed PCO car, commercial van or motorcycle.

A replacement vehicle is only appropriate where you have a genuine, reasonable need for one while your own vehicle is off the road. The need is not automatic: it depends on how you actually use your vehicle.

We’ll ask about your circumstances, including what you use the vehicle for, how often you drive, whether another vehicle is available to you and whether public transport would realistically meet your needs. The at-fault insurer may ask the same questions.

The replacement should also be reasonable in type. The aim is a vehicle that meets the needs your own vehicle met, such as seating, load space, an automatic gearbox or a licence for private-hire work, rather than the most expensive vehicle available.

Anyone claiming losses after an accident is expected to take reasonable steps to keep those losses down. This is known as the duty to mitigate, and it applies to hire charges. In practice, it means you should:

• keep the replacement vehicle only for as long as you reasonably need it;
• tell us as soon as your own vehicle is repaired, returned or no longer needed;
• respond promptly to requests for documents, inspections and repair authorisation, so the claim is not delayed;
• if your vehicle is written off, take reasonable steps to replace it once you are in a position to do so;
• look after the hire vehicle and follow the provider’s conditions of use.

Hire periods that run on longer than necessary are one of the most common reasons hire charges are challenged.

Credit hire rates are usually higher than ordinary daily rental rates, partly because payment is deferred and the provider carries the cost of pursuing the claim.

If you could have afforded to hire a vehicle yourself, the at-fault insurer may argue that it should only pay the equivalent ordinary rental rate, often called the basic hire rate. If you could not reasonably have afforded to hire or buy a replacement without making unreasonable sacrifices, you may be described as impecunious, and the credit hire charges may be recoverable in full.

Where impecuniosity is relevant to your claim, you may be asked for financial information, such as bank statements, and to confirm your circumstances in a signed statement. Any information you provide must be complete and accurate.

Credit is provided on the basis that you help the claim to progress. Hire agreements normally require you to:

• provide documents such as your driving licence, insurance details and vehicle documents;
• give an accurate account of the accident and of your need for a replacement vehicle;
• supply financial information where impecuniosity is relevant;
• sign a statement and, in the small number of cases that reach a court hearing, attend if required;
• keep in touch and tell us about any change in your circumstances.

If you don’t cooperate, choose to pursue the claim elsewhere, or any part of the claim is found to be dishonest, the credit may end and you could be asked to pay the charges yourself.

The hire charges form part of your claim against the at-fault driver. They are presented to the at-fault driver’s insurer, normally by solicitors or claims handlers acting under the hire agreement, together with evidence of your need for a vehicle, the hire period and the rate charged.

Many claims are settled by negotiation. Some take longer, particularly where liability or the amount of the charges is questioned, and the credit period allows time for this. We’ll keep you informed as the claim progresses.

Credit hire depends on the other driver being responsible for the accident. Where the at-fault insurer has not accepted liability, or disputes it, the provider will review the evidence before deciding whether a vehicle can be supplied.

Hire may still be possible where the evidence supports your account, but the risk is higher. If liability is not established, your hire agreement sets out what happens to the charges. We will explain this before any vehicle is supplied, so you can make an informed decision.

Read more: What if liability is disputed?

When you take a credit hire vehicle, you sign an agreement with the hire provider. It is a legally binding contract and you are responsible for the charges under it. The credit simply means you are not asked to pay while the claim is pursued.

Before you sign, you should be told:

• the daily rate and any additional charges;
• how long credit is given for;
• the circumstances in which you could be asked to pay, for example if you don’t cooperate, the claim is dishonest or the claim does not succeed;
• any cancellation rights that apply.

Please read the agreement carefully and ask us about anything you’re unsure of before you sign it.

The at-fault insurer may challenge the hire charges. The most common challenges are to the daily rate, the length of the hire, the type of vehicle or whether a replacement was needed at all.

Challenges are usually dealt with by the provider’s representatives through evidence and negotiation, and many are resolved without a court hearing. Where a claim does go to court, a judge decides what is reasonable.

If less is recovered than the full charges, whether you have to pay any difference depends on the terms of your agreement and on your own conduct. We will explain the position that applies to you before hire begins.

The appropriate hire period depends on the circumstances of the claim.

For a repairable vehicle, this may include the reasonable period during which your vehicle is unavailable for repair. For a total-loss vehicle, it may extend through the reasonable period required to determine and settle the vehicle claim.

Once your own vehicle is repaired and returned, or your total-loss claim has been settled and you have had a reasonable opportunity to replace your vehicle, the hire should end. Let us know and the vehicle will be collected.

Simply Accident Management arranges and coordinates your replacement vehicle, but the vehicle itself is supplied by one of the specialist credit hire providers we work with. You enter into the hire agreement with that provider, and its name and contact details are set out in the agreement.

We stay involved throughout, coordinating the hire alongside the recovery, assessment and repair of your own vehicle, and keeping you updated as the claim progresses.