Judge slams 'staggering' credit hire car costs

A judge has lambasted the credit hire industry over the "staggering" cost of replacement vehicles following crashes.

One motorist was charged more than £50,000 to hire a Tesla for three months after someone reversed into her car, Oxford County Court heard.

In a ruling which criticised the industry as a whole, District Judge Richard Lumb said the cost was triple the market rate for the car and the hire period was 75 days longer than it should have been.

The Credit Hire Organisation, which represents the industry, said the service was a "minor factor" in the overall cost of a motor insurance premium.

Credit car hire is a service where a replacement vehicle is provided on credit to a non-fault driver, with the costs claimed from the at-fault driver's insurer.

The need for insurers to cover credit car hire adds to the cost of motor insurance premiums for all drivers.

The case involved a nurse who applied to recover her costs following the damage to her parked car in Tilehurst, Berkshire, in 2023.

She was charged £524.70 a day for a Tesla Model 3, well above the market rate of £175 a day, the judge said.

He said there was also an "unexplained" two-month delay from when a garage received parts for the damaged Volkswagen ID4 and completed repairs.

The judge said a reasonable repair period would have been 21 days rather than 96.

However, Judge Lumb said the reversing motorist was liable for the full £55,000 because Ms Piercy had acted "beyond reproach".

He ruled: "Unfortunately for the defendant, these claims are rarely decided on the basis of what the claimant could have done to mitigate her losses.

"She was simply following instructions she was given having been introduced into the process by the fleet claim arm of her NHS employers."

The defending motorist's insurers will also have to pay £144 for delivery and collection of the hire car, and £348 to remove the damaged Volkswagen from the scene, even though it was later found to be roadworthy.

The judge concluded: "What might come as a shock to the general public is how the Credit Hire Industry operates.

"In particular, some may consider the sums of money that motor insurers of culpable policyholders become liable for to be staggering.

"In an age where motor insurance premiums are reported to have risen to unprecedented levels, some may find it surprising that there appears to be no real appetite in the insurance industry to campaign for reform, presumably by Parliament, to control the level of credit hire charges compared to the ordinary market basic hire rate."

In a statement, the Credit Hire Organisation (CHO) said the case and the value involved were unlike the vast majority of claims.

It said it had calculated that credit hire added less than £5 to the cost of the average premium.

Chairman Anthony Hughes added: "Many members of the CHO are signatories to the GTA [General Terms of Agreement], a voluntary protocol which reduces friction and speeds up claims settlement times."

The Association of British Insurers declined to comment.

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