Credit hire battles

Craig Budsworth examines why vehicle hire rates vary so wildly and the implications for those supporting or challenging claims

The continued court battles relating to credit hire will be very familiar to most road traffic accident practitioners. After nearly three decades practising in the field, I find that it continues to be both challenging and engaging.

Whichever side of the fence you sit on, you will appreciate that finding a comparable rate for the vehicle hired following an accident is not easy. There are a number of reasons for this and having an understanding of why rates can look so different is crucial when supporting or challenging a rate claimed.

The number one element to consider is whether the claimant is impecunious, otherwise known as ‘being skint’. Arguably, if a hire company has documentation from day one of hire – namely all of their bank statements from three months prior to the hire start date – supporting the contention that the claimant is impecunious, then the rate presented should never be in dispute.

As explained in Lagden v O'Connor [2003] UKHL 64: “It requires the wrongdoer to bear the consequences if it was reasonably foreseeable that the injured party would have to borrow money or incur some other kind of expenditure to mitigate his damages.”

Obtaining this evidence is becoming increasingly easy through the government’s implementation of open banking, with companies now able to access bank records for accounts, rather than posting bank statements.

Assuming the claimant does have funds, then the challenge begins on what the rate should be and what it should include. For those companies who are signatures to the GTA, then the rate is easy, and it is unlikely that these claims will later end up in litigation. Otherwise, you are left with seeing rates reports and screenshots from hire companies described as mainstream, or basic hire companies – the likes of Avis, Thrifty and Europcar.

Deciphering these reports is a challenge because you need to know what is included and what should be added to meet the needs of the claimant. The basic principles have been most recently highlighted in Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93 and McBride v UK Insurance Ltd [2017] EWCA 144. Essentially you need to look at the vehicle hired by the claimant, bearing in mind their locality, the time of hire and the type of person they are.

Location is key

When considering these points, there can be several discrepancies that can cause significant differences in rates. The biggest is location. What most average consumers do not realise is that hire companies do not point out what is available, and more importantly at what cost, in different branches.

Take the difference between Manchester and Liverpool. When writing this article, Europcar had the same Corsa available at £7 per week cheaper in Liverpool. Change the branch to London Kings Cross and the same Corsa, for the same period of time, is £313 dearer than Liverpool. So, a rates company presenting a report quoting the nearest branch will correctly identify the rates and availability of vehicles, but if the branch they present is not the nearest one to the claimant, then questions should be asked as to why not.

Collision damage waivers

An additional charge is also made by hire companies to reduce the excess they would charge if you had an accident in the hire vehicle. This is known as a collision damage waiver (CDW) or excess waiver. Some types of prestige vehicles cannot have the excess reduced to nil but most standard vehicles do. In the example above, Europcar would charge an additional £91 for the waiver.

The McBride case highlights that this additional amount is recoverable: “In cases where the mainstream or reputable local car hire companies in relation to which BHR evidence is obtained in any particular case do quote for a nil excess, it should not be necessary to engage in the separate assessment exercise in relation to the nil excess which I have described.”

There can be several discrepancies that can cause significant differences in rates. The biggest is location 

The separate exercise described is for an additional insurance policy to reduce the excess to nil if the mainstream company cannot. A point to note here is that these policies tend to cover only the final amount and still require the CDW to be paid.

Another element to bear in mind is how much notice has been given when obtaining a rate from a mainstream company. Like rail fares, the more notice you give that you intend to hire a vehicle, the lower the cost. The hire companies also always produce a pay now or a pay later rate, with a discount if you pay up front for the time you wish to hire.

What most people do not realise is that there is no refund if you then return it early, meaning the pay later option might be more applicable in cases with unknown hire duration.

You also need to be aware of the additional extras that can be charged for certain types of driver. In the examples above, if you are under 26, then Europcar would charge an additional £273. It also should be considered whether the claimant would be hired to at all, as most UK-based hire firms will not hire to somebody with an outstanding drink driving conviction.

I cannot foresee an end to the credit hire battles while grey areas continue to exist over rates but I am hopeful that we will see an increase in subscribers to the GTA, thus we will see a reduction in claims being argued.

Craig Budsworth is a CILEX Fellow and legal director at AX UK