The motor insurance industry has for 25 years been engaged in legal warfare with credit hire companies that lease replacement transport to those whose vehicles are damaged in accidents. It is perhaps easy to see why, in the light of a case in which hire charges were run up that totalled over 20 times the value of a written-off car.
A woman’s car, which was worth about £775, had been damaged beyond repair in a collision with another vehicle, the driver of which was wholly to blame. She leased a replacement vehicle through a credit hire company for four months, at a cost of £20,109. The other driver’s insurers agreed to compensate her for her whiplash injuries, but denied liability to cover any part of the credit hire charges.
In dismissing that part of her claim, a judge found that the credit hire company had assured her that she would never have to pay the car hire charges out of her own pocket. In those circumstances, she had never been under any obligation to pay the charges and the replacement car had effectively been provided free.
In upholding her appeal against that ruling, however, the High Court found that she had a contingent agreement with the credit hire company that, if her claim was successful, the latter’s charges would be paid out of her damages. Had she lost her case, she would not have had to pay the charges, but that did not mean that the replacement car had been provided to her for free.
The Court acknowledged that, on the face of it, the amount of the charges appeared eye-watering when compared to the value of the written-off car. However, it consoled itself with the thought that, had the insurers admitted liability earlier and put the woman in funds, the hire charges would have been a good deal lower.