What credit hire supercars received after non-fault claim?

[S1MMA]

Anyone had a non-fault claim in their supercar - where the third party was fully liable and accepted liability quickly, leading to being offered a credit hire car whilst your car is off the road?

I see that the example cars in categories SP12 and SP13 are quite tasty. Just interested to see "like for like" or as close as they can get to "like for like" you've experienced?

[johnnyreggae]

If its non-fault shouldn't the other insurer just supply the replacement NOT make it a 'credit hire' which as I understand it leaves you liable if the provider cannot get paid by the insurer - there's been a few threads about this a while ago to which a car provider contributed but be very careful

[S1MMA]

johnnyreggae said:

If its non-fault shouldn't the other insurer just supply the replacement NOT make it a 'credit hire' which as I understand it leaves you liable if the provider cannot get paid by the insurer - there's been a few threads about this a while ago to which a car provider contributed but be very careful

I don't want to turn this thread into the detail of credit hire/go through the semantics, just want to see what cars people have been given.

If you really want to understand the dynamics - the third party insurer will supply a credit hire vehicle whilst your car is off the road, that IS the replacement. It's credit hire because they won't know how long it will be needed for (no defined period of hire). They will usually have a deal with a credit hire company, or have a captive credit hire company, and the max rates are set by the ABI. The only time you should be liable this way (if the third party insurer has agreed for the credit hire and referred you themselves) is if you don't return it when your vehicle is repaired, or damage it (but only for the agreed excess). Liability has been agreed and there should be no challenge on that.

[sone]

I had an E class merc on hire for 5 weeks while my Audi A6 was repaired after a none fault claim a few years ago. The hire company charged 9k for the hire, not relevant but I think companies like Accident exchange offer a policy for a nominal fee that if the case turns against you, you won't be the one facing a bill.
They incidentally has 430's, Gallardoos and RR's at the time.

[Shnozz]

johnnyreggae said:

If its non-fault shouldn't the other insurer just supply the replacement NOT make it a 'credit hire' which as I understand it leaves you liable if the provider cannot get paid by the insurer - there's been a few threads about this a while ago to which a car provider contributed but be very careful

There's also been a decision recently which didn't go so well for Accident Exchange..

http://www.insurancetimes.co.uk/court-victory-for-...

I had some dealings in that area of law for a while back around the early noughties and was always surprised at the credit hire companies managing to recover vast sums for supercars. Part of the consideration as to whether the cost of "credit" hire over standard hire was:-

1. Impecuniosity
2. A need for a car similar to the damaged one

Rarely would I imagine many supercar owners are financially strapped to the point they couldn't afford to pay spot (standard) hire and later recover the cost so require it on a credit basis only.

Rarely would I imagine that they don't have access to another "everyday" car and the supercar is only a treat for high days and holidays rather than a requirement to be able to conduct everyday life.

Don't get me wrong, I am not casting judgement on someone given such a hire car - at the end of the day you paid yer money for a nice car and why should you be denied the use of it because of someone else's negligence. However, I was more baffled at how the hire companies got around the 2 considerations above that were part of the test of recoverability in credit hire cases..

[cgt2]

Ask Lord Aleem, he will know the answer for sure

[SydneyBridge]

I worked for a firm of solicitors and arranged a Porsche Boxster for a chap who had a non fault accident in his. He was a roofer and used it to get to and from work.

[anniesdad]

Shnozz said:

There's also been a decision recently which didn't go so well for Accident Exchange..

http://www.insurancetimes.co.uk/court-victory-for-...

I had some dealings in that area of law for a while back around the early noughties and was always surprised at the credit hire companies managing to recover vast sums for supercars. Part of the consideration as to whether the cost of "credit" hire over standard hire was:-

1. Impecuniosity
2. A need for a car similar to the damaged one

Rarely would I imagine many supercar owners are financially strapped to the point they couldn't afford to pay spot (standard) hire and later recover the cost so require it on a credit basis only.

Rarely would I imagine that they don't have access to another "everyday" car and the supercar is only a treat for high days and holidays rather than a requirement to be able to conduct everyday life.

Don't get me wrong, I am not casting judgement on someone given such a hire car - at the end of the day you paid yer money for a nice car and why should you be denied the use of it because of someone else's negligence. However, I was more baffled at how the hire companies got around the 2 considerations above that were part of the test of recoverability in credit hire cases..

I wasn't aware of the judgment mentioned above. But it seems a victory for common sense. I've advised quite a few supercar owners over the years not to credit hire when it's been made clear that they have multiple vehicles available to them. Very few if any owners actually "need" a supercar to go about their daily business, the only time you might feel the need for one really is on a race track and even then you can get round in a Skoda Yeti. If in the rare case that this is the clients only vehicle or at least the only one that is available to them, we've always suggested that the client mitigate the claim by hiring something of a lesser value/specification/group.

Assessment of a reasonable credit hire award is down to a bi-lateral agreement between hire company and insurer (the ABI GTA is one of them), or whether the client could/couldn't afford to hire a replacement. There's lots of rules that help govern the process and clients should always be questioned on their need. Obviously in this case the Judge rightly wasn't satisfied that there was a need and so the claim failed.

[Shnozz]

anniesdad said:

I wasn't aware of the judgment mentioned above. But it seems a victory for common sense. I've advised quite a few supercar owners over the years not to credit hire when it's been made clear that they have multiple vehicles available to them. Very few if any owners actually "need" a supercar to go about their daily business, the only time you might feel the need for one really is on a race track and even then you can get round in a Skoda Yeti. If in the rare case that this is the clients only vehicle or at least the only one that is available to them, we've always suggested that the client mitigate the claim by hiring something of a lesser value/specification/group.

Assessment of a reasonable credit hire award is down to a bi-lateral agreement between hire company and insurer (the ABI GTA is one of them), or whether the client could/couldn't afford to hire a replacement. There's lots of rules that help govern the process and clients should always be questioned on their need. Obviously in this case the Judge rightly wasn't satisfied that there was a need and so the claim failed.

Agree entirely chap and a long overdue victory for common sense as you say.

I think that the general commercial view over the years has been "take a punt" by the majority of credit hire providers. The margin is suitably sufficient that a partial recovery still makes it worthwhile and by and large the costs risks will mean often an offer will be made that still makes the whole operation profitable, regardless of whether the tests have been satisfied.

Defendant insurers though have united in recent years it seems in all fields and their two largest outlays must be lobbyists and political donations it seems.....alas, they also seem to have bared their teeth with more aggression on everything that impacted on their profits. Some areas such as fraud, fair enough, but plenty of others too. In terms of credit hire they suffered (justifiable) challenges over the years and were delighted by Autofocus' offering until that little set up blew up.

If I had known then what I know now, and the impact it would have on my own career, I would have gone long on insurance stock and got myself far, far away from the whole industry.

I hope your business is continuing in its success, regardless of the ststorm that seems to be going on out there.

[anniesdad]

Shnozz said:

I hope your business is continuing in its success, regardless of the ststorm that seems to be going on out there.

Oh you know, every day is a challenge fighting the fight for the common man.

Sadly it does seem that both sides are growing further apart when they need to come together. Things like Third Party intervention have helped I guess to ensure at-fault parties admit liability earlier, which generally helps the claims process go quicker and smoother and therefore at a reduced cost. I'm not convinced that their service offering is such a good deal for the innocent claimant, but I shalln't go in to the specifics here.

Cases like the one you mentioned sadly do no favours whatsoever for CHO's like us as like any reasonable minded person I winced at the value of the hire being claimed and can absolutely understand why a layperson might forceably argue the situation as being preposterous. But that's what 7 months hire of a Ferrari can bring. At GTA rates that would be a bill of c.£170K. The £236K mentioned is likely to have been the commercial rate for the Ferrari hire as DLG refused to pay the £170K (+ presumably late payment penalties) bill, both they and AE are GTA subscribers.

Almost all credit hire claims are for much much much much lower amounts. Mainstream cars/commercial vehicles/junior prestige cars based on either agreed GTA rates/bi-laterals or basic hire rates ie. what the hirer would expect to pay if they were to hire a car themselves out of their own pocket locally. Or occasionally at the actual credit hire rate claimed if the client is simply unable to afford to hire a car but needs one for their daily use. Almost all of our non-GTA cases involve some element of invoice crediting.

Readers can be assured that insurance companies do not fall over themselves to pay these hire bills and claims are vetted and verified (there's a whole industry that's popped up around this kind of work including a department set up by Keogh's Solicitors themselves) before being agreed. I can also assure them that there is a LOT of work done in the background (certainly by some CHO's) to speed up processes and to keep hire costs down.

I've often wondered about starting a thread inviting comments/questions about the credit hire/non-fault accident service but I'm not quite sure how well it will be received so have taken to just observing threads that I've happened across from afar where both for and against argue it out amongst themselves. 3 years of investigation by the CMA found that there was a cost to everybody insuring a car of about c.£2 per annum for there being a credit hire service. That's probably £8-£18 less per year than for a BTE LEI policy that has arguable merits. I for one see £2 a year as pretty good value when considering the tangible benefits and the amount of support that innocent parties get by having their claim handled by a CHO as opposed to a defendant insurance company.

Sorry to the OP for taking this so off thread but I hope my comments offer some insight/advice into the issue and my own thoughts into the hiring of supercars on a credit hire basis.

Edited by anniesdad on Wednesday 20th April 11:53

[AyBee]

Shnozz said:

There's also been a decision recently which didn't go so well for Accident Exchange..

http://www.insurancetimes.co.uk/court-victory-for-...

I had some dealings in that area of law for a while back around the early noughties and was always surprised at the credit hire companies managing to recover vast sums for supercars. Part of the consideration as to whether the cost of "credit" hire over standard hire was:-

1. Impecuniosity
2. A need for a car similar to the damaged one

Rarely would I imagine many supercar owners are financially strapped to the point they couldn't afford to pay spot (standard) hire and later recover the cost so require it on a credit basis only.

Rarely would I imagine that they don't have access to another "everyday" car and the supercar is only a treat for high days and holidays rather than a requirement to be able to conduct everyday life.

Don't get me wrong, I am not casting judgement on someone given such a hire car - at the end of the day you paid yer money for a nice car and why should you be denied the use of it because of someone else's negligence. However, I was more baffled at how the hire companies got around the 2 considerations above that were part of the test of recoverability in credit hire cases..

I can understand the judgement in this case, but what was the guy supposed to do? Use other cars and do without his Ferrari for 7 months? That sounds a bit harsh to me...! The whole thing doesn't really make sense to me because it seems to be that you either use an accident management company and take a replacement car, or you don't. I had a non-fault in my Lotus and was offered a Boxster as a replacement; I didn't want to inflate costs for the other side unnecessarily since my car was only a weekend car, but there was no option of "a Boxster every weekend until your car is fixed"...

[anniesdad]

AyBee said:

Use other cars and do without his Ferrari for 7 months?

Exactly that.

[Shnozz]

AyBee said:

Shnozz said:

There's also been a decision recently which didn't go so well for Accident Exchange..

http://www.insurancetimes.co.uk/court-victory-for-...

I had some dealings in that area of law for a while back around the early noughties and was always surprised at the credit hire companies managing to recover vast sums for supercars. Part of the consideration as to whether the cost of "credit" hire over standard hire was:-

1. Impecuniosity
2. A need for a car similar to the damaged one

Rarely would I imagine many supercar owners are financially strapped to the point they couldn't afford to pay spot (standard) hire and later recover the cost so require it on a credit basis only.

Rarely would I imagine that they don't have access to another "everyday" car and the supercar is only a treat for high days and holidays rather than a requirement to be able to conduct everyday life.

Don't get me wrong, I am not casting judgement on someone given such a hire car - at the end of the day you paid yer money for a nice car and why should you be denied the use of it because of someone else's negligence. However, I was more baffled at how the hire companies got around the 2 considerations above that were part of the test of recoverability in credit hire cases..

I can understand the judgement in this case, but what was the guy supposed to do? Use other cars and do without his Ferrari for 7 months? That sounds a bit harsh to me...! The whole thing doesn't really make sense to me because it seems to be that you either use an accident management company and take a replacement car, or you don't. I had a non-fault in my Lotus and was offered a Boxster as a replacement; I didn't want to inflate costs for the other side unnecessarily since my car was only a weekend car, but there was no option of "a Boxster every weekend until your car is fixed"...

Well indeed. And that is where the conundrum sits.

You've paid for use of a Ferrari when you want. Why should you be deprived of that due to some else's fault? Why should you pay for the hire itself when it wasn't your fault?

Well those arguments don't pass several of the Court's tests on the recovery of CH charges, for one.

A requirement was there, and hence a business opportunity which was soon fulfilled. As is the case in any (satellite) industry, some practices were sharper than other.

The issue then became one of bizarre proportionality as the hire costs could easily sway a commercial decision, particularly in relation to whether a damaged car was beyond economical repair. It was also why there was often scratched head as to how a car with a bit if bumper damage ended up a Cat D on ebay...

In the days of old, say your Lotus had a minor bump. Lets say repairs of £2,000 to your pal Steve at the bodyshop. But instead its an insurance claim so its suddenly £3.5 for the repair. Still, a £15k car so its authorised, you p1ss about in the bodyshop's Corsa for a few weeks et voila. Insurance company has spent £3.5k and you're back in your Lotus smiling at how much better it is than a Corsa.

Fast forward to your Boxster tale.

Suddenly, at, say £300 a day hire (at a guess) its another £2100 a week directing to the insurer. We know Lotus parts aren't always on the shelf so say it's a 3 week repair - and I think that is probably optimistic. So £6,300 hire to add.

So £3.5k for the repairs
£6.3k for the hire
Total bill jumps to £9,800

Your car is worth £15k and, in the real world at Steve's bodyshop, has £2k's worth of damage. It's salvage value, as a £15k Elise with the smallest of dings, is high. Say £11k on a bad day.

So the insurers can either write the car off - they pay you £15k. They recover £11k salvage. The deal costs them £4k.

Or they can pay out £9,800 to have it repaired and pay for your Boxster for 3 weeks.

No-brainer.

This example isn't particularly complete and, of course, a credit hire bill will be levied against a third party insurer and not your own so the economics of repair under a fully comp policy are less valid. However, you can see how the whole hire situation can cloud issues of commerciality.





£15k car.

[Shnozz]

anniesdad said:

Oh you know, every day is a challenge fighting the fight for the common man.

Sadly it does seem that both sides are growing further apart when they need to come together. Things like Third Party intervention have helped I guess to ensure at-fault parties admit liability earlier, which generally helps the claims process go quicker and smoother and therefore at a reduced cost. I'm not convinced that their service offering is such a good deal for the innocent claimant, but I shalln't go in to the specifics here.

Cases like the one you mentioned sadly do no favours whatsoever for CHO's like us as like any reasonable minded person I winced at the value of the hire being claimed and can absolutely understand why a layperson might forceably argue the situation as being preposterous. But that's what 7 months hire of a Ferrari can bring. At GTA rates that would be a bill of c.£170K. The £236K mentioned is likely to have been the commercial rate for the Ferrari hire as DLG refused to pay the £170K (+ presumably late payment penalties) bill, both they and AE are GTA subscribers.

Almost all credit hire claims are for much much much much lower amounts. Mainstream cars/commercial vehicles/junior prestige cars based on either agreed GTA rates/bi-laterals or basic hire rates ie. what the hirer would expect to pay if they were to hire a car themselves out of their own pocket locally. Or occasionally at the actual credit hire rate claimed if the client is simply unable to afford to hire a car but needs one for their daily use. Almost all of our non-GTA cases involve some element of invoice crediting.

Readers can be assured that insurance companies do not fall over themselves to pay these hire bills and claims are vetted and verified (there's a whole industry that's popped up around this kind of work including a department set up by Keogh's Solicitors themselves) before being agreed. I can also assure them that there is a LOT of work done in the background (certainly by some CHO's) to speed up processes and to keep hire costs down.

I've often wondered about starting a thread inviting comments/questions about the credit hire/non-fault accident service but I'm not quite sure how well it will be received so have taken to just observing threads that I've happened across from afar where both for and against argue it out amongst themselves. 3 years of investigation by the CMA found that there was a cost to everybody insuring a car of about c.£2 per annum for there being a credit hire service. That's probably £8-£18 less per year than for a BTE LEI policy that has arguable merits. I for one see £2 a year as pretty good value when considering the tangible benefits and the amount of support that innocent parties get by having their claim handled by a CHO as opposed to a defendant insurance company.

Sorry to the OP for taking this so off thread but I hope my comments offer some insight/advice into the issue and my own thoughts into the hiring of supercars on a credit hire basis.

Edited by anniesdad on Wednesday 20th April 11:53

Interesting stuff Steve. Like all industries, the sharks swim among the goodun's and then they come onto the radar for attacking as a whole. The industry as a whole is taking a constant barrage of abuse from all directions it seems - all aspects of it.

From what I know of europa it seems to be well-regarded and has many fans so long may you continue and I wish you all the best going forward.

[AyBee]

Shnozz said:

Well indeed. And that is where the conundrum sits.

You've paid for use of a Ferrari when you want. Why should you be deprived of that due to some else's fault? Why should you pay for the hire itself when it wasn't your fault?

Well those arguments don't pass several of the Court's tests on the recovery of CH charges, for one.

A requirement was there, and hence a business opportunity which was soon fulfilled. As is the case in any (satellite) industry, some practices were sharper than other.

The issue then became one of bizarre proportionality as the hire costs could easily sway a commercial decision, particularly in relation to whether a damaged car was beyond economical repair. It was also why there was often scratched head as to how a car with a bit if bumper damage ended up a Cat D on ebay...

In the days of old, say your Lotus had a minor bump. Lets say repairs of £2,000 to your pal Steve at the bodyshop. But instead its an insurance claim so its suddenly £3.5 for the repair. Still, a £15k car so its authorised, you p1ss about in the bodyshop's Corsa for a few weeks et voila. Insurance company has spent £3.5k and you're back in your Lotus smiling at how much better it is than a Corsa.

Fast forward to your Boxster tale.

Suddenly, at, say £300 a day hire (at a guess) its another £2100 a week directing to the insurer. We know Lotus parts aren't always on the shelf so say it's a 3 week repair - and I think that is probably optimistic. So £6,300 hire to add.

So £3.5k for the repairs
£6.3k for the hire
Total bill jumps to £9,800

Your car is worth £15k and, in the real world at Steve's bodyshop, has £2k's worth of damage. It's salvage value, as a £15k Elise with the smallest of dings, is high. Say £11k on a bad day.

So the insurers can either write the car off - they pay you £15k. They recover £11k salvage. The deal costs them £4k.

Or they can pay out £9,800 to have it repaired and pay for your Boxster for 3 weeks.

No-brainer.

This example isn't particularly complete and, of course, a credit hire bill will be levied against a third party insurer and not your own so the economics of repair under a fully comp policy are less valid. However, you can see how the whole hire situation can cloud issues of commerciality.

I agree, and the system has definitely been open to abuse in its current form, but unfortunately, it's the honest people who lose out. I'm all for keeping costs down, but if I had a Ferrari in the garage and it was damaged through no fault of my own to the tune of 7 months' non-use, I'd want a Ferrari for those days where I would have normally used my Ferrari. I'd be happy to have it collected and dropped off as needed, but that doesn't appear to be an option offered...

[pork911]

Credit hire is predicated on a sham.

[anniesdad]

pork911 said:

Credit hire is predicated on a sham.

Sigh. Dealt with in Giles v Thompson.

Replacement hire vehicle provided on credit to replace accident damaged vehicle - that's about the size of it? If hirers had to pay for their own hire cars out of their own funds or on a credit card, do you think the defendant insurer wouldn't challenge the bill that they receive like they do ours and all other CHO's? Trust me they pull hire periods apart all day every day...and that wouldn't stop.

Bodyshop margins are being ever squeezed and it is these organisations that are expected to provide a free courtesy car solution when it is well understood that courtesy car fleets are ever reducing.

Innocents rightly expect a replacement car to go about their business not to have to catch the bus/train or walk. They have the full backing of the courts on this.

[anniesdad]

AyBee said:

I'd want a Ferrari for those days where I would have normally used my Ferrari. I'd be happy to have it collected and dropped off as needed, but that doesn't appear to be an option offered...

It's not. You won't get a credit hire company delivering and collecting, re-delivering, re-collecting etc a Ferrari/any car on a personal whim.

If however you wanted to spot hire one (Auto Vivendi/Lord Aleem) as and when needed you could go right ahead but of course the insurers are likely to challenge you before reimbursing all the costs.

I think credit hire for such a car is arguably appropriate say where you have a driving holiday booked (pre-accident) and the family SUV won't cut it.

[MKnight702]

When someone reversed into my Ultima and cracked the headlamp cover (the first time I took the car out!) their insurers tried to get me to have a like for like replacement. I told them not to be so stupid and got on with my life. Several months later the car was repaired by the factory.

[anniesdad]

MKnight702 said:

When someone reversed into my Ultima and cracked the headlamp cover (the first time I took the car out!) their insurers tried to get me to have a like for like replacement. I told them not to be so stupid and got on with my life. Several months later the car was repaired by the factory.

Genuinely, good for you. I guess the Ultima isn't your only car?!

The insurers will have marked their records, quite probably recorded the call and if you had subsequently hired a car from a different organisation later down the line when the Ultima was being repaired they would have refused to pay on the basis of your recorded conversation, that it wasn't needed.

Sadly in their desperation to deal with such an incident and in consideration of the final incentives involved they sometimes can't see the wood from the trees and force a service onto innocents that simply isn't required.

In your situation I'd have probably advised against hiring.

I'd love to know what they would have offered as a like for like to an Ultima!