Credit hire is where an innocent party to a motor claim is placed in a replacement vehicle, free of charge to that individual. The hire company then invoices the ‘at fault’ insurers directly.
Hire Claims – Why are they so expensive?
Hire claims are regulated by a contract between Credit Hire companies and Insurers called the ABI General Terms Of Agreement. (GTA).
- Group S1 (1 litre or less) = £31.46 + VAT per day
- Group SP2 (eg mini cooper 1.6) = £78.29 + VAT per day
- Prestige vehicles BMW, Audi & Mercedes are over £100 per day.
- Don’t hit an Aston as these are £600 / day!
- If you are interested can see the agreed costs here.
- Under the GTA the motorist is permitted to hire a like for like vehicle.
- Only if the hirer’s vehicle is older, they are expected to downgrade at least 2 classes
- It has been established that , if offered, most people would agree to a slightly smaller vehicle as long as they are kept mobile.
What can we do about it?
If we get the claim form immediately we can intervene before a third party is placed in credit hire. Once they are in a credit hire vehicle we are not permitted to take them out due to the GTA rules.
By controlling the hire for the third party...
- We can keep a much closer control over the hire period,
- We can probably put the third party in a smaller car than they would get through a credit hire company.
- We won’t be liable to pay admin fees
Additionally The GTA sets out specific obligations controlling hire times
• Inspection must take place within 48 hours of hire starting,
• The vehicle must be off hired no later than 48 hours repairs are completed
• Once a total loss cheque is received the vehicle must be off hired in 7 days
We also need to be vigilant on settling the bill quickly
• The insurer has 30 days to pay for the hire.
• After 30 days there is a penalty payment.
• After 60 days there is another penalty payment.
• After 90 days the rate reverts back to ‘spot rate’.
It is key therefore for us to determine liability early so payments can be made within the first 30 day bracket. It is also vital for any driver to report claims as soon as they occur.