Insurer accused of insisting policyholders use credit hire cars

Highway Insurance is in trouble with brokers again. Brokers claim Highway insists that policyholders use credit hire cars from Drive Assist following non-fault accidents.

The issue first surfaced in September last year when Donald Rodger, managing director of legal expenses firm WiseCall Claims Assistance, said he had received several complaints from brokers that their customers were being passed on to Drive Assist in return for "introductory fees".

Topaz Insurance Services claims manager Mark Connell said one of his customers had been forced to pay an additional premium of £52.50 for a Drive Assist car. He said although this could be recovered from the third party insurer, it was an unnecessary burden on the policyholder, who also had to pay an excess of £200.

"In effect, insurance companies are making money out of clients who have accidents. They're getting the money for adding the vehicle on to the policy and then they're getting the money for the referral to a credit hire company," he said.

Normally, insurers ask their approved repairers to supply policyholders with courtesy cars after accidents. The insurance on these cars is included in the policy.

However, the use of a credit hire car requires the policyholder to take out extra legal expenses cover.

At Highway, the policyholder is passed to its legal expenses insurance division, Crusader, which instructs Drive Assist to supply a credit hire car.

Highway said it was not normal practice to insist on credit hire cars and their use depended on each client's circumstances.

Highway managing director Andrew Gibson said the issue was a "storm in a tea cup".

"We don't want to give it any more time because it's being looked at internally and it's been looked at by the Financial Services Authority (FSA). It has confirmed to us that it has no concerns at all," he said.