Car insurance : credit agreements/credit protection insurance

wronskian

Hi all,

I've got a question about a car insurance claim I'm going through. I would like to know whether what I describe is considered 'normal' these days, and whether I'm being unnecessarily concerned.

The accident details are quite simple : I was hit from behind, and my insurance are confident that they'll be able to get a settlement.

So then I'm passed to their legal team. They offer me a credit
agreement, under which the repairs to my car will be funded, and a hire car procured, with a view to reclaiming this against the third party upon settlement.

This credit extends for 49 weeks, and accrues simple interest at a yearly rate of (base rate + 5%). Not extortionate by any means, but still non-zero! If after 49 weeks, settlement hasn't occured, the bill would then fall to me. However...

Then they have also given me, free of charge, acredit protection
insurance policy. This pays out if the 49 weeks expire and the bill falls to me. It is designed to protect me in this situation. (And, of course, protect them: if I couldn't otherwise pay, they will still get their money.)

There are some exclusions : notably, if I fail in my duty to inform on any updates to the case, if I don't use the approved garage/car hire people, and also if they fail to trace the third party (which I consider very unlikely in this specific case).

This does seem a bit heavy-handed, although I appreciate it's allowing things to get moving more quickly (I have a hire car and the parts are on their way to fix my car). So my question: is this standard practice now? Should I be concerned?

Any opinions would be really appreciated. (I haven't yet returned the signed agreement!)

Thanks,
Sam

Astaroth

I take it you had TPO or TPFT insurance?

It sounds very much like you have been passed to a credit hire car company rather than the "legal" department of your insurance company - my guess would be a company call Albany which is now owned by the largest credit hire company HelpHire.

This certainly isnt common practice if your policy is comprehensive as the policy itself would cover the cost of the repairs. If you do not have a courtesy car entitlement on your policy or need a better vehicle than the policy provides then often your insurers will refer you to a credit hire car company for the hire aspect of the claim only. They too will ask that you sign a credit agreement and there are various options on protecting yourself from the repayments if the case doesnt go as expected.

If you are TPO or TPFT then this is one possible route... the other route is for a "true" uninsured loss recovery department or solicitor to be appointed and they would identify the third party's insurance company and then request that they deal with the repairs of your vehicle directly. This obviously removes the risk of you having to pay anything out (short of you not giving the hire car back when they ask etc) but will often take longer as the decision on liability has to be reached first.

wronskian

Many thanks for your reply. To answer your questions : no, I have fully comp insurance and, yes, it's Albany.

I'm a little uneasy, because I don't see why my own insurance can't chase the Third Party and claim that way. I'd be happy to pay the £100 excess for now and try to claim it back later. £100 isn't that much in the grand scheme of things.

However, my own policy doesn't have hire car cover, so I would be left without transport. At the moment, my own car is at the repairers, they've done the estimate, parts are on order, I'm in the hire car, and they're just waiting for approval. That won't happen until I return the credit agreement. I get the feeling it may be too late in some respects!

They've made no effort to contact the Third Party yet (it was a commercial driver, so it's almost certainly OK assuming he was supposed to be driving his vehicle at the time).

All food for thought - thanks again.

Astaroth

It certainly is unusual - obviously they are getting a rather healthy referal fee from albany if they are giving credit repair cases when you are comprehensively insured.... certainly in my claims days we would have pushed back on the fee they charge if you have comprehensive insurance but that would be between the insurers/ albany and not you.

Wyndham

I think it's very odd. It's bad enough when someone has run into you, without then having to pay for a policy like this. Surely you pay your premium so you won't have to do this sort of thing?

Personally, I'd kick up a fuss and see what happened. They may be trying it out to see how it goes, and if they get a high take up rate then they may bring it in as standard.

gyzmo

Its not that odd for this to happen, just widely unpracticed because it is akin to loan-shark practices.

The Association of British Inusrers has set out details of what it believes are fair charges for car hire. If a company tries to charge more than this, without VERY good reason, then it would be unlikely to reclaim the money back.

the idea of asking you for a fee in the event taht thye can't make a recovery is, though legal, reprehensible. It's like payment protection on your credit card. Any hire car provider will ask you for the money if they cannot reclaim the costs.