Uninsured loss recovery specialist Optionclaim this week emerged as the first company to go into liquidation following the Dimond v Lovell ruling on credit hire in May.

Optionclaim voluntarily entered into liquidation towards the end of last month. The company's two biggest debts are to car hire giant Hertz (£700,000), and the Inland Revenue (£250,000).

Optionclaim provided ULR services for around 500,000 vehicles – believed to be around 3% of market share.

A statement from the ULR firm's legal advisers said: “Optionclaim ran into cash flow problems as a result of the Dimond v Lovell ruling which has affected the whole industry.”

Optionclaim's directors, Marlon Potts, Robert Moore and Raymon Auty, finally caved in on July 28 and Sheffield-based administrators Poppleton & Appleby were appointed.

Optionclaim's demise follows the House of Lords ruling that ULR firm 1st Automotive's credit hire agreement with Vanessa Dimond was unenforceable because it did not comply with the Consumer Credit Act 1974.

The ruling left scores of ULR firms in a perilous financial position. Those with similarly-worded policies were unable to claw back claims costs from insurers, particularly on replacement hire vehicles supplied while policyholders' cars were under repair.

The ruling prompted Optionclaim to sell its on-going policyholder list to a new company called Roman Associates in June for an undisclosed sum.

Roman was formed by Optionclaim director, Marlon Potts.

Optionclaim's claims handling staff have also switched to the new company based in Staffordshire.

Roman chief executive Potts said: “We have begun streamlining operations and are launching new products as well as enhancing existing services and I am confident the company will enjoy a successful year.”

A spokesman for the new company said: “The transfer of claims handling staff will ensure that the service provided by Optionclaim will continue.

“Details of the sale have been well-received by our major referral sources, including brokers and intermediaries.”

A spokesman from the Motoring Uninsured Loss Recoveries Association said: “Last week's Dimond v Lovell casualty, Optionclaim, provides a timely reminder to brokers that any ULR provider whose profits are ultimately dependent on credit car hire could let them down.

“ULR based on inflated vehicle hire rates can never be a substitute for a properly under-written, pre-paid ULR contract.”