Credit hire: The key to a well-crafted intervention letter

The world of credit hire has moved on extensively in the ten years since the Court of Appeal’s decision in Copley v Lawn, however, a properly crafted intervention letter remains a key tool for insurers in beating down the rising cost of credit hire.

There is little doubt that in the near future insurers are likely to see a significant spike in credit hire claims and there is certainly a change on the horizon in terms of how these claims are to be presented. But in the midst of these reforms insurers would be well advised to remember that intervention should remain a key part of their credit hire strategy.

Of course, for any intervention letter to have the desired effect, it must be Copley-compliant. The waters have been slightly muddied by the volume of related litigation in the past decade, so it makes sense to revisit the guidance provided by Lord Justice Longmore.

It is often difficult for insurers to strike the right balance in terms of the volume of information to include in such offers. For an intervention offer to be compliant it must contain all such information as will be relevant for the claimant or their advisors to make a reasonable response. But this must then be weighed in the balance with the need to be clear, simple and concise.

Key to such an offer is clarity in terms of the cost of the hire. An intervention letter must make clear to the claimant that whilst the car may be free to them, there is a cost to the insurer. It is important to set out what those costs are so that a claimant is able to compare the credit hire costs against the cost to the insurers.

Confirmation that any vehicle provided will be comparable to the claimant’s own is a must and in order to allow a claimant to make an informed decision it may well be prudent to include details of any deposit required and excess payable.

Insurers will be all too aware that a typical response from a claimant’s representative is likely to include a long list of further questions, which rather than a genuine request for additional information, seems more like an attempt to frustrate the intention of the intervention letter.

Such can be the extent of these additional requests that attempts to include this information in the offer itself is likely to fall foul of the need to be clear, simple and concise. To pre-empt such requests, insurers may wish to annex a “frequently Asked Questions” section to their intervention letters. These can cover the most commonly posed questions such as mileage restrictions and other limitations.

Not providing a sufficient response may mean that a court does not take the intervention offer into account making it more likely that higher credit hire rates will be allowed. But not every aspect can be covered nor every question answered, so the key for an insurer is to provide sufficient information to allow a claimant to make an informed decision.

If they can do that, there is a good chance of obtaining a significant reduction on the rate allowed and reducing the overall claim.

With the battle between insurers and credit hire companies only set to intensify it will be ever-more crucial for insurers to adopt a proactive and pragmatic approach with intervention being core to their credit hire strategy.

Christopher Dibb is a member of FOIL’s Credit Hire Sector Focus Team and an Associate at Plexus Law