CREDIT HIRE: What is it and how can it affect me if I am involved in a crash?


What is "credit hire" and when is it used?

Credit hire is the supply of a like-for-like replacement hire vehicle on a credit basis to the not-at fault vehicle owner following a non-fault accident. Rather than paying for the hire of the vehicle at the time of hire, the credit hire company will attempt to recover the costs of hire from the at-fault driver's insurer once the claim is settled. Credit hire may be available to any non-fault vehicle owner whatever their own insurance status - comprehensively insured, third party insured or even (in many cases) uninsured as the claim is not against their own insurance but directly against the the insurer of the at-fault third party driver.

Are credit hire agreements legally enforceable?

Most credit hire law comes from two cases: Clark v. Ardington [2002] EWCA Civ 510 and Lagden v. O’Connor [2003] UKHL 64,

In Clark the court held that a credit hire agreement could be valid, enforceable and exempt from the Consumer Credit Act.  If a credit hire agreement complies with the Consumer Credit (Exempt Agreements) Order 1989, then it is likely to be valid. This requires the debt to be paid in not more than four instalments, less than twelve months from the date of the agreement. Most challenges to the validity of credit hire agreements are generally unsuccessful provided the agreements comply with the above and a challenge against an agreement per-se is a rarity. Legal challenges now tend to focus on the circumstances in which the claim is made and the amount being claimed.

Where (and why) do problems with credit hire arise?

From a consumer point of view the problem is that the contract is between the credit hire company and the owner of the vehicle involved in the non-fault collision. The owner of the damaged vehicle enters into a contract whereby they hire the vehicle from the credit hire company on the basis of a credit agreement - with the bill payable at a future date and the costs recovered directly by the credit hire company from the at-fault driver's insurer.

Credit hire works on the basis that the payment will be recovered from the at-fault driver's insurance company and no charge will be payable by the (non-fault) recipient of the hire.

But the contract will usually include a clause which means that if the credit hire company cannot recover from the third party they may have recourse against the recipient of the hire - ie the owner of the non-fault vehicle. Thus potentially the recipient of the hire can be landed with a massive bill if:

  • they (or the driver) are held partially or wholly liable for the accident

  • the hire of the vehicle is deemed too long or unnecessary

  • the recipient of the hire is given a substantially better vehicle (charged at greater cost) than the one that was damaged

  • they fail to adequately assist the credit hire company in bringing a case against the third party insurer.

  • the recipient of the hire has, or (arguably) could have obtained and paid for, an equivalent vehicle to their own on a non-credit basis without suffering any financial burden

All the above scenarios will be discussed in detail below.

Please note that if a credit hire claim goes to court the case will be nominally between the non-fault party (as the claimant) and the at-fault party (and the defendant) -- but most cases will be subrogated to the credit hire company and the at-fault party's insurer who will bear the legal costs and meet any payments resulting from the case.

When is a credit hire possible?

Credit hire should only be taken:

  1. if there is no doubt as to liability.

  2. for the duration of the period of loss of use of the damaged vehicle. Please note that if the vehicle is safe and drivable this may only be for the period during which repairs are actually being undertaken (see "duration of hire" below).

  3. the driver has no other equivalent "spare" vehicle available and without depriving another driver (usually spouse or partner) from using it; and

  4. in theory at least,  the driver could not have obtained or paid for an alternative vehicle without suffering any financial impediment (ie they had spare money they did not need for anything else).


Why are credit hire rates so high compared to normal rates?

The credit hire industry body argues that while spot hirers take no risk as to settlement by being paid up-front, the credit hirer takes all the risk as to their bill being settled at end of claim - which could be several months hence or in some cases, never. Their charges also need to include an element to cover the costs of the credit and sufficient margin to cover cases where costs are not recovered.

Furthermore they need to have a wide range of instantly-available replacement vehicles to hand and these need to be delivered nationally at all times of day and night.

Credit hire rates are regulated and agreed rates are set by agreement between the credit hire companies and the Association of British Insurers:


They are higher than spot rates but provided that the various other issues dealt with in this FAQ are appropriately dealt with then all participating insurance companies (see above link) should settle claims.

In all circumstances make sure any company you use is "First Tier ABI" - see above link for more information.

How do most people come to use credit hire companies?

Most people are contacted by an "accident manager" having had their details passed on by their own insurer after they informed them of a non-fault accident. "Accident Managers" and "Accident Management Companies" are usually either credit hire companies themselves or they will be referring your case (for a referral fee) to a credit hire company.

Just because your insurer has "referred" you to them does not mean you should enter into the agreement blindly -- nor do you have to accept your insurer's recommendation.

Insurers derive revenue from referral fees paid to them by accident managers who make their money from providing (amongst other things) credit hire vehicles in non-fault accident cases. Generally the accident management companies who get the work from your insurance company will be the highest bidders. They are not necessarily of the highest quality or the most reputable.

If you are offered a replacement vehicle following an accident the questions to ask before delivery are:

  • is this a "courtesy car" or a credit hire vehicle?

  • in what circumstances is it possible I could be held liable for the payment of the hire or use of the vehicle?

The answer to the latter should be "only if you deliberately deceive us as to the circumstances of the accident and your personal position."

Otherwise walk away.

Some credit hire companies will cover the entire risk of providing the credit hire (and any loss -- in court if necessary) except in the case of deliberate fraud.  Find one of them -- or www.autosure.eu/ ask me.

When should I not accept a credit hire vehicle?

  • If there is any doubt as to whether the other party is 100% liable.

  • If the damage was minor and your vehicle is drivable (you will not be entitled to a hire vehicle except for the actual period during which the repair is undertaken).

  • If you have an equivalent vehicle you would not otherwise be using (and would not be depriving another person of using - such as your spouse or partner's car)

  • arguably, if you have the means to hire an equivalent vehicle for the full period necessary without suffering any deprivation (deprivation being in the legal sense - that you had no other possible need/use or future use for the money).

What is the difference between a credit hire vehicle and a courtesy car?

A credit hire vehicle might be hired to you following a non-fault accident by a credit hire company. It is normally provided on a "like for like" basis following loss of use of your own vehicle and payment is subject to a credit agreement which you enter with the credit hire company. If all goes well the payment for the hire should be recovered directly by the credit hire company from the insurer of the at-fault driver(s). In some circumstances you could be liable for any charges made under the agreement that they cannot recover.

A "courtesy car" may be provided while your car is repaired and may be funded by your insurance policy or by agreement with the third party insurer. Courtesy cars are normally "stock" vehicles often provided by the repairing garage. They may be offered following non-fault, split liability and at-fault accidents. In the case of split liability and at-fault cases they may be costed into your claim on your comprehensive policy and hence might be chargeable against your policy excess.

  • Be wary of accepting a credit hire care if liability is in any way in dispute.

  • Unless you have specific cover always question if there will be any cost implication of a "courtesy car" if the accident is likely to be split liability or you might be found to be at fault -- particularly if the cost of repair(s) is close to your policy excess.

  • Always declare any entitlement to a "courtesy car" to the credit hire company - even if you were not at fault in the accident and the car on offer as a courtesy car is not "like for like".

I was in an accident which was not my fault. Am I entitled to a replacement vehicle?

Generally speaking the law provides that if you suffered damage or injury wholly caused by another person you should not be disadvantaged in any way.

However the law says your need for a replacement vehicle is not a given. In most circumstances showing the need will be easy to satisfy but you may not be entitled to a replacement vehicle if it can be shown that yours was not needed for the period of repair.

Circumstances where this might apply might include:

  • if you were to be on holiday abroad and the vehicle concerned was to be parked up for the entire period of the repair.

  • if your car was damaged but you had another of equivalent quality available for your sole use parked in your garage

The need for a hire car is not self-proving (Giles v Thompson [1994] 1 AC 142 per Lord Mustill at 167).

However a need for use is no defence in these circumstances. If you can show a potential requirement for use -- ie that you may have wished to use the vehicle but could not as no car was available (or did not even if one was) then the loss of potential use is likely to be enough.

I was in an accident which was not my fault. Am I entitled to a like-for-like vehicle?

Generally speaking the law provides that if you suffered damage or injury wholly caused by another person you should not be disadvantaged in any way. Thus if you drive an Aston Martin which is damaged in a collision which is not your fault then you should should be provided with a vehicle of equal prestige and not asked to accept the body-shop's Micra while yours is off the road.

The converse equally applies. If your Micra is damaged and a credit hire company offers you an Aston Martin the insurer of the at-fault driver cannot be expected to pay the additional hire costs. Falsely "upgrading" you is a well established scam. Never accept a credit hire vehicle which is better than the vehicle it is replacing unless the hire company guarantees in writing that it will be charged to the third party at the same rate as your own vehicle. Failure to do so can leave you picking up their bill.

On like for like" be aware that the entitlement to claim for an equivalent vehicle is not unlimited.

From the Law Society Gazette:

In Boardman v Byrne [2008] Lawtel (Walsall CC, 18 April 2008), Mr Boardman owned a Porsche GT3. He claimed that it was a very rare car, which personified a certain image of wealth to the outside world (insert your own view as to the image conjured up). An ‘ordinary’ Porsche 911/966 would not, in his opinion, have been an adequate substitute. His Porsche garage did not have a GT3 and referred him to Accident Exchange Ltd who supplied him with a Mercedes Benz SL55 AMG at £675 per day.
The court found that if Mr Boardman had given the matter any thought – which he didn’t in fact – then he would probably have hired the best available Porsche car and his stance about ‘lesser models’ was unreasonable. He recovered the average ‘spot hire’ rate for a Porsche 911/966 of £253 per day.

The claimant is entitled an equivalent vehicle (Lagden v O’Connor [2004] AC 1067 per Lord Hope at paragraph 27).

Whether you can hire another vehicle on credit hire is another matter (see: hire rate and impecuniosity (below).

Older Credit Hire Cases: Permitted duration of Hire

Even if you were not at fault if your vehicle suffered only minor damage (so as not to render it unusable, dangerous or illegal) then the only period for which you can claim a credit hire is for the period in which it needed to be off the road to be inspected and/or repairs to be actually undertaken. If you are offered a credit hire for a minor bump (such as parking damage) bear this in mind and if the accident management or credit hire company says otherwise you should refuse to deal with them.

If your damage was more substantial then the repairs must be conducted in a timely manner. It may be / is in the interest of the Accident Manager to delay repairs as much as possible so as to extend the period of the credit hire and hence their fees/commission. Furthermore repairers routinely charge insurers storage fees and are often dependent on the accident manager so are happy to participate in delaying the work being undertaken. If you have any suspicions that the repair is being unreasonably delayed place the accident management company on notice of your concerns immediately in writing and if the problem persists send a copy letter outlining your concerns to the third party's insurer. If you acted reasonably in placing your vehicle with what appeared to be a reputable firm then they can seek a contribution from the accident manager and garage and you will almost certainly not be adjudged to be liable for the hire costs resulting from the delay.

In the case of a more substantially damaged vehicle which has been repaired the vehicle should be collected immediately and the credit hire car returned or you will be liable for the daily hire rate. Only a claimant who was unable to pick up his vehicle straight away giving a specific, good reason – such as being away on business in the hire vehicle – is likely to succeed in avoiding personal hire charges.

Older Credit Hire Cases: Permitted duration of hire for written off vehicles

When a vehicle is written off, other complexities may arise. I work on the basis that the acceptable hire period is from the date of accident to the point at which the settlement payment is received.

But arguably the non-fault driver's means to pay comes into play in this area. For example if the non-fault driver can afford to buy a new vehicle from his own means straight away then a hire period longer than a few weeks might be argued to be unjustified - but assuming fault is admitted then the same arguments apply as to why the insurer has not settled the claim in a reasonable time period.

Thus although this is considered to be an issue elsewhere (and hence mentioned)  as with "credit hire and means to pay" (below) we have never lost a case on it.

Hire Rate: Credit Hire and Means to Pay for Spot Hire - so-called "Impecuniosity" (See latest case law tat the end of this FAQ.)

Those of us who are of the view that some insurers have deep pockets and very short arms might have their opinions buttressed by the latest wave of cases troubling the courts concerning "impecuniosity".

The law regarding credit hire - what is recoverable and what is not - is pretty much established along the framework I have outlined above: Broadly speaking if you are a non-fault claimant you are reasonably entitled to a replacement vehicle to the equivalent of that which you lost for the period you reasonably have it.

The only question remaining is as to how the replacement is provided and when, who and how someone pays for it.

As I have detailed above most insurers are very happy to accept substantial kickbacks from firms buying their non-fault personal injury claims and credit hires but some shout very loudly and head in the direction of court when they are the insurer of the at-fault party and a similar claim is made against them.

Central to this issue is who pays - and when - for your replacement car when another driver puts you off the road?

As things stand if you can be shown to be "impecunious" - ie you don't have any money or spend too much of what you earn or have - the chances are you can have a credit hire and the other party's insurer will be forced to pick up the bill without a problem.

Similarly if you drive a prestige, rare or expensive model then current case law falls in your favour.

The people left fall into the middle ground are careful, saving types with a job, a fair credit history and a standard, widely available vehicle.

At risk of sounding like the Daily Mail much of "honest and decent" middle England.

As some lawyers have it while the courts will accept that "impecunious" and/or the wealthy (but not the very wealthy) will reasonably have a credit hire vehicle provided at no risk to them, most of the population who are crashed into by a third party and not at fault will be expected to hire their own replacement vehicle at spot-hire rates, pay for it from their own resources or using their own lines of credit and then claim any costs back - possibly months, maybe years later - from the at-fault party's insurer should they (finally) admit liability.

I do not accept that this is or should be the case and it is not the basis on which our legal insurers work in providing a replacement vehicle in the event of an accident.

We have never yet lost a credit hire case on the basis of means and I do not expect to do so in future. The relevance of means is one of the few areas of credit hire law to have yet been definitively tested by the courts. However my view is that the means of the claimant are irrelevant and they do not figure in our own assessments as to whether we will fund a vehicle.

These are:

  1. if the accident is non-fault you will always receive a vehicle to the equivalent standard to which you lost.

  2. your means are irrelevant to us. We will provide a replacement vehicle on a "no risk to you" basis as long as you are honest about the circumstances surrounding your case (see 3. below).

  3. unless there is deception or attempt to mislead involved as to the circumstances of the accident in any case we deem to be non-fault you will never be billed in any way. We will meet the full cost of provision of the equivalent replacement vehicle to that which has been damaged at no risk or charge - and irrespective of means - throughout the period where we deem you lost use of the vehicle until such a time it is deemed repaired or is written off by the third party insurer.

For more information go to www.autosure.eu/

21-8-2014: Latest Basic Hire Rates

Warning: If an 'accident management company' furnishes you withn a hire car while yours is being repaired, these are the maximum rates a UK insurer will pay for that hire. You will persaonally be liable for any costs over these figures. 

Other common questions:

Credit hire case: Why am I named as defendant or claimant?
As with all aspects of a road traffic accident the claim is between the parties to the accident. Thus even if your insurance company (or another party) is fighting the case on your part they may well be doing so on a subrogated basis. This means they incur the costs and risks of the action but they are not named as a party to it on a formal basis.

Credit hire case: what is my risk of having to pay a credit hire bill personally (I was at fault),
Almost none – unless you were uninsured. You may well be named as a defendant in a case which is why this question arose. But your case is likely to be subrogated and any legal costs or costs or penalties imposed by the court met by your insurer. We usually see these cases when there is a minor collision when the owner of the other vehicle has been provided with a credit hire they did not need at great cost. If they are using a bad credit hire company then the financial risk to them is far greater than it is to you. Send all information received to your insurance company. If you feel you need assistance or wish to have free, private consideration of your case contact me through the "ask Lucy" section of this website.

Credit hire case: what is my risk of having to pay the credit hire bill (they were at fault)
Any reputable hirer – and that does not necessarily include the largest or best known – will provide the hire car at their risk. You should only face risk of personally covering it if you have misled them in any way. Regrettably credit hire is sufficiently profitable that many bad practices have developed. If you should not have been provided with a credit hire vehicle in the first place because the degree of damage did not warrant it, if the repair was unreasonably delayed, if a better vehicle was provided than that which was damaged or if you were found to be responsible you may be asked to pay all or part of the costs of hire.

Credit hire case: Questions regarding means, payslips, bank statements and credit card bills

My view is your means are irrelevant in almost all cases. Contact me via Ask Lucy (on this website)  if you wish me to consider your case in detail.


All policyholders must pass all third party/court corres to  their insurers as soon as it is received, under policy conditions.

Also in accordance with policy conditions, it is entirely a matter for insurers as to how the summons/ third party claim is dealt with.


Your insurers will have to pay any unsatisfied judgement handed down by a County Court, in accordance with the requirements of the Road Traffic Act. If costs to your insurers should be  increased by her failure to allow them to deal with this claim, they may be entitled to seek reimbursement from the policyholder.

Generally, third party insurers are there to deal with all aspects of third party claims. There should never be any need for 'Accident Management Consultants' and by employing them yo can waive your rights under your insurance contract with your insurer.

The fact that the third party claim may look suspicious is irrelevant to the immediate action required of the policyholder.  This must be referred to your insurer. Do not attempt to deal with it yourself.

However, if you somehow breached the terms of your insurance, or are in dispute with your insurers over a breach, and that is the reason why the insurer will not pay the third party.  And that is a very good reason to take out a legal protection policy right now so you have the back up should you ever need it.


An agreement is in place between the Association of British Insurers and the credit hire providers which sets out standard terms of trade and the rates payable. The rates are higher than "spot" rates but provided liability is agreed quickly and the repair effected as soon as possible or the claim settled, they are affordable.

However some insurers are not signatory to the ABI agreement and habitually challenge all claims. In cases which have gone to court the rulings have all been very much one way -- in support of the principle of credit hire although some of the practicalities have been challenged.

Successful challenges have been made when the hire has been unreasonably extended by the accident management company slowing down the repair to bump up the hire charges (failure to mitigate loss) and when other vehicles not required by others have been available (although the latter applies more to an Elton John level of vehicle ownership where there would be no deprivation to any third party -- rather than ability for a daughter to occasionally borrow mum's Micra, when mum would clearly be deprived of use).

Generally speaking the challenging insurers resort to "embarrassment tactics"  rather than any legal point -- relying on the last unclarified area in credit hire law - which is the "means of the hirer" to hire at spot rather than credit hire rates, -- the so called "impecuniosity" argument, demanding payslips, credit card bills and bank statements to try to show that the claimant could have afforded to hire a car at spot rates rather than the higher "credit hire" rate.

I know pretty much all of the insurance lawyers who advocate this tactic and their main reason for doing so is to break down the cooperation between the claimant and their insurer.

Most credit hire agreements are backed with a secondary insurance policy which requires cooperation on the part of the claimant hirer. If that cooperation is removed then the recourse of the credit hire company will be directly against the non-cooperative hirer rather than their client, the defendant of the claim.

Although revealing pay slips and bank statements might be a sound practical legal tactic -- and we have had a number of cases where people have gone to the brink of refusing to do so -- I don't think "impecuniosity" makes for a good argument in law. My own view is that even if a person has a few thousand in the bank and access to greater credit lines, I don't believe the court would take the view that they should be denied the use of it for other purposes to pay a hire bill for a third party who caused them damage or loss until such a time as the latter's insurer agrees to settle.

Significantly none of the challenging insurers have taken such a case to the court of appeal in this regard.

CREDIT HIRE: 39 separate FAQ answers and explanations (written from the point of view of the credit hire operators).

These are the people who fix you up with a car to keep you on the road while your car is being fixed, which can take 6 months or more if some parts are not available. 

WARNING: The proliferation of aftercrash Credit Hire is costing insurers vast amounts of money and this is one of the main reasons for significant rises in Insurance Premiums. Nothing is for Nothing. 

Old URL: www.nacho.org.uk New URL: www.thecho.co.uk 

9-9-2011: Government to Ban Car Crash and Personal Injury Referral Fees

The Government is to ban Car Crash and Personal Injury Referral Fees as part of reform of the personalinjury claim process.

Simon Douglas, director of AA Insurance responded: "We are pleased the reforms being put forward by the Minister will tackle the growing claims culture which is one of the main drivers of rising car insurance premiums. So-called 'referral fees' have become synonymous with the selling-on of driver details by a range of organisations to claims management firms, usually without drivers' knowledge. The reform of 'success fees' and capping of them will discourage many claims from being made in the first place. We hope that this will bring to an end the practice of no-win no-fee cold calling and the relentless advertising by accident management and Personal Injury firms to encourage drivers who may or may not have been injured in a collision, to make claims.

"We welcome this and provided all of the recommendations, including banning of referral fees, put before parliament become law it will help to reduce car insurance industry claims costs, particularly for whiplash claims and thus reduce pressure on premiums."

"The changes should still ensure that those who are legitimately injured remain able to claim compensation and gain access to legal advice if required," he added.


25-11-2011: Case of England footballer Darren Bent

The Court of Appeal found in favour of England footballer Darren Bent in his ongoing credit hire legal wrangle with Allianz Insurance.

The Aston Villa footballer and Allianz policyholder was involved in a road traffic accident in February 2007 and subsequently hired an Aston Martin DB9 after being referred to credit hire firm Accident Exchange.

In a series of court cases  <http://www.insuranceage.co.uk/professional-broking/news/1597077/allianz-wins-darren-bent-credit-hire-appeal> Allianz challenged the period of hire, rate of hire and need for the hire.

In February 2011 <http://www.insuranceage.co.uk/insurance-age/news/2026433/darren-bent-force-drivers-shop-credit-hire> Judge Plumstead's ruling meant that Mr Bent, who sought to recover £63,000 after renting the car from Accident Exchange at a rate of  £573.28 per day + VAT, failed to recover more than £20,000.

The latest ruling from the Court of Appeal overturning that judgement was described as "a victory for common sense" by Accident Exchange.

According to the company their Lordships found that three earlier House of Lords decisions and one Court of Appeal decision had already established the principles concerning the basis on which the innocent
victim of a road accident can recover the cost - and the level of those damages - of hiring a replacement car on credit terms.

Unhelpful and confusing

The company added that in a long judgement the judges also found that the term "spot rate" was unhelpful and confusing and should be replaced by the term "basic hire rate"; that even though Mr Bent did not  thoroughly research the market rates for car hire it was not an "automatic failure to mitigate" and that he was entitled to recover the appropriate charges for hiring an Aston Martin DB9 which was a reasonable replacement for his damaged Mercedes AMG.

Steve Evans, chief executive of Accident Exchange, said: "There is a perfectly sensible way for these claims to be negotiated and settled so that the cost and inconvenience to everybody is minimized; it's the GTA [the Association of British Insurers' General Terms of Agreement].

"In this case, however, we seemed to have been faced with a solicitor and insurer who wanted to make law when three earlier House of Lords and one Court of Appeal decision have already done the job for them."

He added: "The unexpected benefit from the judgment was the Court of Appeal's endorsement of the historic rates stored in the Spotratecheck database which were held to be the best evidence on which to base the

Both parties had until Friday 25 November 2011 to indicate whether they wish to seek leave to appeal the judgment to the Supreme Court.


2nd December 2011: Statement from Accident Exchange concerning Autofocus:

Motor insurance: Court of Appeal result lifts lid on potentially the largest ever fraud on the British civil justice system

Prestige replacement vehicle specialist, Accident Exchange (AEL), first alerted the markets to concerns over the legitimacy and accuracy of reports produced by Autofocus in September 2009. Nobody listened and both insurers and solicitors acting for those insurers argued that, even if their evidence was suspect, the answer
Autofocus got to was probably right.

Following an Order of the High Court, allowing the examination of the books, records and e-mails of Autofocus (now in liquidation) the evidence showed that there was a culture of systematic dishonesty within Autofocus to produce manufactured rates evidence designed to deceive the Courts.

Early examination of the files, emails and reports show that this was done on an industrial scale. With more than 30 credit hire businesses impacted and more than 16,000 potential cases adversely affected by Autofocus, Accident Exchange and its legal advisers believe the scandal is the largest ever fraud on the British civil justice system.

Whilst the Serious Fraud Office - which has reduced its own average investigation time from 45 months in 2008-09 to 24 months this year - has a great deal of expertise available in-house and coercive powers of investigation, it does not have to run a business at the same time.

But that's what Accident Exchange was forced to do as its wholly legitimate complaint of fraud was met by a desperate rear-guard action by Autofocus. The complete denial by insurers and those solicitors representing were using their success in trials to undermine the benefit of managing these claims within the ABI (Association of British Insurers) GTA protocol.

AXA, an insurer that left the ABI GTA at the peak of Autofocus activity, was one of the most prolific users of Autofocus data.

The documentation that Accident Exchange has in their possession, which was publicly disclosed to the Court of Appeal yesterday (1st December 2011), shows that Autofocus was a corrupt business.

In respect of the four appeals heard - which are representative of thousands more - the Court of Appeal agreed.

In each case, the new evidence showed that the defendant insurers were relying on testimony in support of the appropriate rate of hire that could be recovered (the Base Hire Rate), which was flawed, untrue and a fraudulent misrepresentation.

As a result, the Court ruled the Judge's decisions in the original trials were not honest and the innocent motorist was denied a fair trial.

Autofocus went into administration in July 2010 after the High Court ruled against their claim that their employees should be protected by the witness immunity rule. The argument that they should enjoy the same protection as police officers investigating a crime and subsequently giving evidence was wholly rejected by the Court of Appeal the previous month.

The task of identifying the scope of the fraud has not been easy, especially with the lack of will or assistance by insurers who were the ultimate beneficiaries of Autofocus evidence. If they have investigated it at all, they have not divulged the results. Their stance since 2009 has been to attempt by any means possible to hold on to what are plausibly alleged to be the proceeds of the crimes of others.

With one former Autofocus employee already found guilty, committal applications have been issued in the Divisional Court against seven former colleagues, an action that will probably produce further evidence yet.

In 2009, Accident Exchange estimated the loss to their business at a figure of at least £20 million forcing it to make 300 employees redundant. Today's judgement is a significant step in rectifying the damage caused by a widespread fraud involving the production of 'expert evidence' to get the 'right result' in Court rather than allowing the court to decide the answer from honest evidence.

Commenting on the judgement, Steve Evans, CEO of Accident Exchange Group PLC, said: "Given the issues we brought to the attention of the Court of Appeal in these cases, we expect the courts to be much more cautious in the weight they give to evidence from 'rate experts' who, in the case of Autofocus, behaved with utter contempt for the rule of law. We hope that in future cases, insurers and defendant solicitors will now properly examine the veracity and accuracy of evidence they deploy."


Following a Call for Evidence, the Office of Fair Trading has today launched a market study into private motor insurance in the UK, which includes a focus on the provision of third party vehicle claims and credit hire. The OFT's findings suggest that there are features of the UK's private motor insurance market that require
further analysis. The Credit Hire Organisation (CHO) welcomes the OFT's goal to understand better the industry and urges the consumer protection and competition body to take into consideration all of the evidence to reach a full and fair set of valid conclusions.

Premiums exaggerated
The CHO's comprehensive submission to the OFT's Call for Evidence clearly demonstrated that the average cost of hire across the industry has fallen; the average length of repair and hire has fallen; and that total industry costs for hire have remained static. The CHO strongly disputed the exaggerated claims about the rise in the cost of private motor insurance premiums, and therefore welcomes the OFT's acknowledgement that "actual premiums being paid appear not to have risen as far as estimates might suggest."

GTA provides certainty and cost control
The CHO works in partnership with the insurance industry, for mutual benefit and to the advantage of consumers, via a voluntary protocol which sets the terms, conditions and rates for credit hire in the UK. The ABI General Terms of Agreement (GTA) covers 90 per cent of credit hire in the UK and ensures that all claims are handled at the lowest possible cost. The OFT agreed, following an analysis of the GTA in 2004, that the protocol provides greater certainty and security for those motorists using credit hire vehicles.

Martin Andrews, Director-General, CHO, said: "We are extremely experienced in assessing the accident circumstances and our clients' needs, striving to bridge the gap in insurance arrangements whilst delivering an excellent customer experience at minimum controlled cost. The Credit Hire Organisation looks forward to working with the Office of Fair Trading and participating fully in this market study. The CHO will continue to work to protect the cost controlled environment that credit hire provides to those innocent victims of motor crashes who need a replacement vehicle to go about their daily lives and thereby ensuring that the needs and rights of motorists are adequately protected."

The Credit Hire Organisation (CHO) is the official trade body, representing the credit hire industry. The credit hire industry offers mobility solutions and often uninsured loss recovery to the motorists involved in an accident that was not their fault. The industry works closely and in partnership with insurers through an established, voluntary protocol that protects motorists' needs and rights, recovering the costs involved from the insurer of the person responsible for the accident. For more information please go to www.thecho.co.uk 


Credit hire: impecuniosity and mitigation of loss
Umerji v Zurich Insurance PLC 26 March 2014

In an important decision for motor insurers, the Court of Appeal has held that the issue of impecuniosity goes to the period of hire as well as the rate. Issues relating to the burden of proof, the appropriate period of hire and when the hirer should take steps to arrange for the repair (or replacement) of their original vehicle were also addressed.

The potential impact of the Claimant’s comprehensive insurance policy on mitigation was considered briefly but not addressed directly.

There is now a strong incentive on defendant insurers to quickly confirm their position with regard to the vehicle inspection. They may have no intention of carrying out their own inspection of the damaged vehicle (in order to agree the pre-accident value or repair costs). Alternatively, they may decide to effect the inspection and divulge the report as soon as possible, lending support to the argument that the hire claim should end about two weeks thereafter. Taking a prompt commercial view on those options could now result in a drastic reduction in the hire (and any storage) claims presented by a pecunious claimant.


Impecuniosity arguments can apply to the period of hire as well as to the rate of hire.
The onus at the outset of a claim is on the claimant hirer to provide documentary proof in support of an averment he is impecunious. After that point in time, it is for the defendant to show he is not impecunious. This case should help to greatly reduce wasted correspondence with credit hire organisations on this point.

If a claimant hirer fails to argue impecuniosity in time and in accordance with a court order he will probably be debarred from doing so later in litigation and be considered to be a pecunious claimant (a person who is in funds).Debarring orders have become all the more possible in the post-Mitchell world of litigation.

When the defendant insurer has either confirmed it does not intend to inspect a vehicle or has inspected and outlined its position on repair/pre-accident value, the pecunious claimant should move quickly to dispose of his vehicle, repair it and/or replace it. If he does not, the defendant insurer may now have strong arguments to reduce the total period of hire.


The Claimant owned a Mercedes car worth about £8,000. On 19 October 2010 he was involved in an accident and his car was damaged. It was in due course assessed as a write-off. The other driver was the First Defendant, whose insurers were the Second Defendant.

Following the accident the Claimant entered into a credit hire agreement with Elite Rentals (Bolton) Ltd. He rented a replacement car for a total period of 591 days at a cost of £95,130.14, representing a rate of about £161 per day. Recovery and storage charges came to £3,420.75. He claimed that he was unable to afford to buy a replacement vehicle until the Second Defendant paid him the pre-accident value of his old car on 16 November 2012.

In the course of proceedings, an order was made by a District Judge providing that the Claimant should confirm within 14 days whether he intended to allege that he was impecunious at the time of hire. The Claimant did not make any statement in accordance with this order. At a subsequent hearing, a Deputy District Judge debarred the Claimant from pleading impecuniosity.

At first instance, Mr Recorder Alldis held that the issue of impecuniosity went only to the hire rate claimed but not to the duration of the hire. He gave judgment for the Claimant in respect of the entirety of the period of hire for £101,559.36, representing £92,386.54 for hire charges and £2,540 plus VAT for storage charges and interest. As the Second Defendant had by an oversight failed to adduce evidence of basic hire rates, it was accepted that the Recorder should assess damages by reference to the full commercial credit hire rates actually paid.

This decision was taken to appeal.


Giving the leading judgment of the Court of Appeal, Lord Justice Underhill held that the Claimant was debarred from arguing impecuniosity out of time:

"An averment by a claimant that he had to hire a replacement car for as long as he did because he did not have the money to buy one is a claim of impecuniosity just as much as a claim that he had to pay credit hire rates because he did not have the money to hire on the ordinary market…"

The burden of proof was on the Claimant to prove that credit hire expenditure was reasonably incurred:

"There is no doubt a grey area about how much needs to be pleaded and proved to establish reasonableness before the evidential burden shifts to the defendant to show that the expenditure was unreasonable. But in this kind of case it is clearly right that that a claimant who needs to rely on his impecuniousness in order to justify the amount of his claim should plead and prove it."

On this basis the Claimant should only have been entitled to recover hire charges up to the date when he should reasonably have bought a replacement vehicle. It was reasonable for him to wait until an assessment had been made of whether it was economic to repair the damaged vehicle. The Defendant insurer had the opportunity to inspect the vehicle and say whether they agreed the valuation but delayed on that. Therefore the Claimant was allowed to wait until he could dispose of the vehicle on this particular case and thereafter allowed 14 days to get a replacement vehicle.

Counsel for the parties were asked to agree the correct figure for damages on that basis.

The appeal in respect of storage charges was dismissed. Underhill LJ encouraged claimants’ advisers in a similar situation to put the defendant’s insurers on notice promptly that storage charges are being incurred and to impose a clear deadline after which the vehicle will be disposed of. However, he was not prepared to state that it was wrong to say that the Claimant’s advisers had done enough in this case.


The Court of Appeal declined to consider the issue of whether the Claimant should have claimed the value of the damaged vehicle under his own comprehensive insurance policy and used the proceeds to buy a new car. Whilst Underhill LJ recognised that the point is an interesting one and plainly of some general importance, it had not been pleaded and the relevant issues had not been explored properly in evidence.

Read more: http://www.kennedyslaw.com/casereview/credithire/

Dissertation by Philip Rawlings and Joanna Rudd: 


Review by Keoghs of Recent Case Law Relating to Credit Hire:


A warning by Lamb Chambers to those bringing large motor insurance claims, specifically referring to the ruling in Hardip Singh v Rashed Yaqubi: 


St Johns Chambers on Opuku v Tintas 5-7-2003 on impecuniosity:


Conference Pack on Credit Hire from Personal Injury Conference 12-6-2014:








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