Claim from 'at fault' car accident party's insurance company

DullGreyGuy

jlfrs01 said:

After receiving the hire car I read all the paperwork and to my horror found that I'd be on the hook if the insurer refused to pay or the hire company failed to recover their costs in full or in part.

I subsequently found out the hire company was planning to bill the insurer a huge amount for this vehicle which scared me to death so I had it picked up and the contract cancelled. I called the at fault's insurer who then put their own, approved hire car company in touch to supply a courtesy car. I think this almost seems like a racket - the hire company can't fail to win but insurers do seem to be on to them, just my opinion though. Hope the OP gets it sorted. 

Obviously not seen the wording you agreed to but typically it states that you are liable for the cost of the hire up to the amount the court orders the third party is liable... the effect of this means the shortfall disappears and it deals with a prior issue that enabled TP Insurers to avoid credit hire bills.

On typical wordings the only time you are actually going to pay the credit hire company are 1) you commit fraud, 2) you damage the hire car or 3) you stop supporting them in their attempts to recover their outlay.

Aretnap

jlfrs01 said:

I had a rear-end shunt about 3 years ago, my insurance company initially put a hire car company in touch with me to provide a vehicle whilst mine was being fixed, I thought "that's great and the car they're offering is brand new and much nicer than my own so why not if the at fault's insurance company has to stump up for the bill?"

After receiving the hire car I read all the paperwork and to my horror found that I'd be on the hook if the insurer refused to pay or the hire company failed to recover their costs in full or in part.

Vanishingly unlikely that you would have had to pay anything.

With a credit hire agreement the fact that you are personally liable for the hire costs is mostly a legal fiction which is necessary to the costs to be recovered from the third party insurer in the first place. You can only reclaim costs that you have actually incurred after all. If the credit hire company gave you a car out of the goodness of their hearts with no cost to you then the third party's insurer wouldn't have to pay the credit hire company anything as a result - why would they? And if the cost of the hire car to you is zero then the amount that you could claim from the insurance company yourself is... also zero.

So the theory is that the hire car company provides you with a car, you don't have to pay for it up front but the hire car company does present you with a bill... and you then (with a lot of help from the hire car company) take the third party insurer to court for the amount of the bill.

That does in theory leave you liable for the cost of the bill itself should the third party insurer avoid paying. But the hire car doesn't actually want to charge you - that's not how their business model works. So they have got round the problem by various methods, such as by including a clause which says that your liability is limited to the third party's liability (ie you have to pay whatever you can recover from the third party - and no more) or providing a "free"* insurance policy which pays any excess fees if the full amount cannot be recover from the third party.

In 99% of cases the only reason you would actually have to put your own hand in your pocket would be if you broke the terms of the hire agreement, eg by actively misleading the hire company about the circumstances of your accident, or by not assisting then when they tried to recover their fees from the third party.

*Described as free but actually built into the cost of their hit car fees. The fact that they do not make full recover in every case is part of the justification for credit hire companies charging much higher rates than normal car hire companies.

chrisw

I don't think it's always necessarily a rip off. I had a Mercedes C220 on credit hire from a well known rental firm. I panicked when I saw the initial rental figures of £260 + vat per day, but they explained they had a special insurance rate and the final invoice went out at £59 + vat per day which I didn't think was too bad.

DullGreyGuy

chrisw said:

I don't think it's always necessarily a rip off. I had a Mercedes C220 on credit hire from a well known rental firm. I panicked when I saw the initial rental figures of £260 + vat per day, but they explained they had a special insurance rate and the final invoice went out at £59 + vat per day which I didn't think was too bad.

The official ABI agreed rates are published online at https://www.gtacredithire.com/rates/car-hire/

A Mercedes C220CDI is £146.40 + VAT and must include free delivery/collection etc.

Individual insurers and hire companies are free to come to their own agreements, we had the largest credit hire company that gave a 20% discount based on a no questions asked (but right of audit) settlement. Our own preferred supplier of hire cars, a well known rental firm, would give us our commercial rates if we confirmed no queries on indemnity or liability within 24 hours and that probably would have been about £59/day

Not all companies (credit hire or insurers) are party to the ABI agreement and in those cases the sky's the limit for charges. One company aimed at "prestige" vehicles was charging £1,000 a day for a SL500 which is more than 3 times the ABI value

[Deleted User]

It's when they start arguing that you didn't need a Merc, a Ford would have done.

Apprentice2019

Im sure I’m probably going to be told off for this but….

I sort of get the premise of “mitigate your losses”, however if the other party is at fault (I.e. probably driving stupidly) why should “a Ford will do when I drive a Merc etc”?

DullGreyGuy

Apprentice2019 said:

Im sure I’m probably going to be told off for this but….

I sort of get the premise of “mitigate your losses”, however if the other party is at fault (I.e. probably driving stupidly) why should “a Ford will do when I drive a Merc etc”?

As long as you never complain about the price of car insurance ever again then that's fine. 

The courts generally accept the idea of like for like hire without too many questions but they do tend to allow more questions being asked about a prestige mark being necessary. There are many who very much are in your camp of entitlement though, remember one case of a few months of hire for a BMW 7 series starting a few days after the accident even though the third party, who lived alone, was in hospital for the first 6 weeks so the car just sat on his drive. Even when they handed it back they'd only done 100 or so miles 

[Deleted User]

Apprentice2019 said:

Im sure I’m probably going to be told off for this but….

I sort of get the premise of “mitigate your losses”, however if the other party is at fault (I.e. probably driving stupidly) why should “a Ford will do when I drive a Merc etc”?

It depends why you bought that particular car. If it was because you needed enough space for your family, or because you move large items around, or because you do a lot of travelling and a city car doesn't offer the kind of comfort and fuel economy on the motorway that makes that bearable, then okay, fine.

If you just want a particular badge for the prestige it will be harder to argue. Maybe your job as a rep demands a repmobile to give the clients a certain impression, but if it was just an aspiration and nothing more then a similar but cheaper vehicle might be arguable.

chrisw

Apprentice2019 said:

Im sure I’m probably going to be told off for this but….

I sort of get the premise of “mitigate your losses”, however if the other party is at fault (I.e. probably driving stupidly) why should “a Ford will do when I drive a Merc etc”?

That was my view, pootling along minding my own business. The rental firm had categories so the invoice says vehicle class driven - premium 4/5 door auto, vehicle class charged - premium 4/5 door auto. Seems reasonable enough to me.

The hire costs for a month were a small fraction of the overall damage claim. There were probably other bits and bobs I could have claimed for as well had I been so inclined.