Other insurers could benefit after court rules claim for more than 10 times car value was excessive

Insurers won a battle in the Court of Appeal yesterday as an excessive credit hire case for more than 10 times the value of the damaged vehicle was overturned.

Zurich had been ordered to pay £108,659.36 for 591 days of credit hire as well as recovery and storage, but this has been overturned and the length of the hire has been reduced to just 140 days.

Zurich argued that the claimant’s wealth should be taken into consideration when assessing the acceptable length of credit hire and that he could have bought a replacement vehicle sooner.

The judge agreed and said that, despite an ongoing dispute over liability for the written-off car, the claimant should have bought a replacement car earlier, removing the need for credit hire.

The judge also questioned why the claimant had not negotiated weekly hire rates with the credit hire firm, Elite Rentals (Bolton), when he knew the period of hire would exceed seven days.

Wider benefits for insurers

DAC Beachcroft head of motor Craig Dickson, who defended Zurich, said the ruling could deter credit hire firms from unnecessarily extending credit hire agreements.

“What we’ve been asking for a number of years is that there has to be a duty on the hirer to minimise the losses [from providing a replacement vehicle], and [the policy holder’s] financial resources is relevant to that,” he said. “This should be considered before they sit them in a new hire vehicle and rack up costs more than 10 times the value of their own car.

“[This ruling] will dis-incentivise the hirer and credit hire companies that seize this kind of opportunistic case, because it forces them to look at the true financial position of the person in the vehicle.”

And Dickson said this would have an effect on the whole credit hire market.

“It’s not a judgement that will just affect those at the more dubious end of the scale,” he said. “All credit hire companies don’t currently investigate when they put someone in a hire vehicle. It’s a very light touch approach to need, and its always been approached on the basis that if there’s an issue, they will wait for the defending insurer and see what comes out in the mix.

“Now there is a positive requirement on them from the Court of Appeal to set out their case at the start. Before, that was not the case, it was get the hirer into the vehicle as quickly as possible and watch the hire fees rack up while discussions take place.”

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