Legal director responds to industry observations around increased credit hire costs linked to the Covid-19 pandemic

Although industry professionals have raised their eyebrows at the increased costs surrounding credit hire, attributed to the Covid-19 pandemic, AX legal director for credit hire Craig Budsworth, speaking on behalf of the Credit Hire Organisation, said that cleaning costs are vitally important as “the penalty for getting it wrong could be somebody’s life”.

In September, Insurance Times spoke to Ian Davies, partner and head of motor at law firm Kennedys. He suggested that credit hire organisations are using the ongoing Covid-19 pandemic to reap further income opportunities, for example around additional cleaning costs. He adds that “challenging cases” linked to the national lockdown are also beginning to be more prevalent.

He told Insurance Times: “We are seeing, quite consistently now, cleaning invoices – so clean down a car at the end of a hire period, very specific Covid clean down.

“Whether that’s justified or not, advice is being given to clients, but [credit hire providers] were cleaning the car anyway. The fact that [they are] now cleaning the car with an antibacterial agent rather than a polishing agent still means [they are] cleaning the car, so a £50 charge to me seems a little bit rich.

“We’re also seeing an increase in the length of hire and there are some challenging cases that are starting to come through. Challenging in a sense that maybe the lay individual had no ability to advance it, that the garage that their car was [in] was maybe closed down, maybe furloughed and they’ve been in hire for five months while their car has sat on blocks in a garage somewhere being repaired.”

Equally, Catherine Burt, national head of counter fraud at DAC Beachcroft, told last month’s virtual Fraud Charter attendees that she had noted “definite trends” in terms of credit hire, with extended hire periods due to quarantining and “extortionate” cleaning costs, again linked to the virus.

Responding to these industry observations, Budsworth said: “A Covid deep clean of a vehicle is a lot more than a quick wipe over with a bit of disinfectant.

“Furthermore, collecting vehicles from self-isolating customers and customers who are ill from the virus requires additional safety and decontamination measures, as well as additional irrecoverable downtime, as those vehicles can’t necessarily be ‘turned around’ within normal timescales. It’s not a case of just changing the cleaning product.

“The penalty for getting it wrong could be somebody’s life.”


Addressing the trend of vehicles remaining at garages during the pandemic, Budsworth continued: “If a car is stuck in a garage owing to Covid, then there is no act of negligence to disturb the chain of causation. It is there owing to an act of negligence by the policyholder. The well-known doctrine of ‘take your victim as you find him’ applies.

“We do not believe it is right that during lockdown, innocent victims of negligence should forego their right to mobility. Indeed, in April the [Credit Hire Organisation] asked the FCA to investigate whether some insurers were ‘over-interpreting’ the regulations by suggesting that, because customers were in lockdown, they didn’t need mobility at all.”

Budsworth emphasised that collaboration between credit hire companies and insurers is pivotal, especially as the pandemic has progressed and had such an impact on the motor insurance sector more broadly.

“CHCs have no interest in advancing claims that cannot be justified. It merely delays payment and causes friction. The majority of claims are settled under agreements between CHCs and insurers and these have continued despite the Covid challenges,” he explained.

“Dialogue between insurers and CHCs has been largely constructive, evidenced for example by the [General Terms of Agreement] subscribers statement of intent signed in April, and the CHO maintains its view that in very challenging times, it is important to remember that we all share the same customers.

“Our aim as an industry is to keep the wheels of justice turning and ensure customers’ claims can be settled as quickly and efficiently as possible.”

For Budsworth, “the issues arising from longer hire periods have been a matter of industry focus for several months and it will some considerable time before we have clarity on how big an issue it will really be”.