Credit Hire Explained for UK Road Traffic Accident Claims

When you are involved in a road traffic accident in the UK, one of the immediate concerns is how you will continue to get around if your car is damaged and off the road. For many people, arranging alternative transport quickly is essential for work, family, or daily commitments. This is where credit hire comes in.

Credit hire is a service that provides a replacement vehicle to a non-fault driver after a road accident. Unlike hiring a car in the usual way, you don’t need to pay upfront. Instead, the credit hire company covers the cost initially and later claims the charges back from the at-fault driver’s insurance company.

This article will explain credit hire in detail, how it works in the UK, its benefits and challenges, and what accident victims need to know before agreeing to such an arrangement.

What is Credit Hire?

Credit hire is the supply of a replacement vehicle on credit to an innocent, non-fault driver whose car has been damaged in an accident. Instead of paying cash or using a credit card, the accident victim signs a credit hire agreement. This agreement states that the hire company will recover its charges from the insurer of the party who caused the accident.

The idea is simple: if someone else’s negligence has taken your car off the road, you should not suffer inconvenience or financial loss. You are entitled to be put back in the position you were in before the accident, which includes having access to a similar vehicle.

How Does Credit Hire Work in the UK?

1. 1. The Accident Happens
      You are involved in a road traffic accident, and your car is no longer drivable or needs repairs.
   2. You Contact a Credit Hire Company
      Often, solicitors handling your personal injury or accident claim recommend a credit hire company. You can also approach one directly.
   3. Assessment of Eligibility
      The company checks whether you were not at fault and whether the other driver’s insurer is likely to accept liability.
   4. Replacement Vehicle Provided
      A car of similar type, size, and quality to your own is provided. For example, if you drove a family SUV, you should not be given a small city car, as that would be considered unfair.
   5. Credit Hire Agreement Signed
      You sign documents confirming you will not be charged immediately. Instead, the company will recover the hire charges later.
   6. Claim Against At-Fault Insurer
      The credit hire company then pursues the at-fault driver’s insurance company for payment of hire charges.

The Legal Basis for Credit Hire

Credit hire in the UK is supported by legal principles under tort law. When another driver negligently causes an accident, they are legally responsible for compensating you for your losses. Courts recognise that being without a vehicle is a genuine loss, so providing a replacement car is a valid claim.

Key cases such as Lagden v O’Connor [2003] established that non-fault drivers should not be disadvantaged if they cannot afford to hire a replacement vehicle themselves. This means even if you do not have spare money, you can still claim for a replacement vehicle on credit.

Benefits of Credit Hire

Credit hire has become a vital service for accident victims in the UK. Some of the main benefits include:

• • No Upfront Cost – You don’t need to pay immediately for the hire car.
  • Access to a Like-for-Like Vehicle – Ensures you can continue your daily life with minimal disruption.
  • Convenience – Many credit hire companies handle delivery, collection, and insurance arrangements.
  • Legal Protection – The charges are recovered from the at-fault party’s insurer, not from your pocket (if liability is clear).
  • Support for Non-Fault Drivers – Helps people who may not have the funds to hire a car privately.

Risks and Challenges of Credit Hire

While credit hire has clear advantages, it is not without challenges:

1. 1. High Hire Charges
      Credit hire companies often charge more than standard rental firms. Insurers frequently dispute these costs.
   2. Liability Disputes
      If the at-fault driver’s insurer denies liability, you may face difficulties. The hire company may then expect you to assist in legal proceedings.
   3. Duty to Mitigate Loss
      You must show that you genuinely needed the hire car and that the period of hire was reasonable. Courts expect accident victims to act responsibly and not keep the car longer than necessary.
   4. Potential Personal Liability
      In rare cases, if the claim fails or liability is disputed, you might become responsible for the charges under the credit hire agreement.

The Role of Solicitors in Credit Hire

Solicitors often work closely with credit hire companies. When you make a personal injury claim after an accident, your solicitor may arrange a replacement car for you. They ensure that liability is established before recommending credit hire to reduce risks.

They also negotiate with insurers over hire charges and defend your right to a replacement car in court if needed.

Common Disputes in Credit Hire Cases

Credit hire claims are often challenged by insurers. Typical areas of dispute include:

• • Rates of Hire – Insurers argue that cheaper cars were available.
  • Duration of Hire – Insurers claim the repair or replacement should have been quicker.
  • Need for a Car – They question whether the claimant really needed a car (e.g., if they had access to another vehicle).
  • Like-for-Like Provision – Disputes about whether the replacement vehicle was equivalent to the damaged one.

Courts assess these issues carefully, balancing fairness to accident victims with concerns about inflated costs.

Example Scenario of Credit Hire

Imagine Sarah, who drives a BMW, is hit by another driver at a junction. Her car needs two weeks of repairs. Sarah cannot afford to hire a BMW herself, but she still needs a car for work and family.

She contacts a credit hire company, which provides her with a similar BMW on credit. The company then claims the hire charges from the at-fault driver’s insurer. If the insurer disputes the cost, Sarah’s solicitor may step in to support her claim.

Credit Hire and UK Law: Key Cases

• • Dimond v Lovell [2000] – Highlighted the importance of assessing whether credit hire agreements are enforceable.
  • Lagden v O’Connor [2003] – Confirmed that financially vulnerable claimants are entitled to credit hire.
  • Stevens v Equity Syndicate Management Ltd [2015] – Addressed disputes over reasonable rates of hire.

These cases shape how courts handle disputes between insurers and credit hire companies today.

Practical Advice for Accident Victims

If you are considering credit hire after a UK road traffic accident, keep the following tips in mind:

1. 1. Confirm Liability – Ensure the other driver was at fault before entering a credit hire agreement.
   2. Check Terms Carefully – Read the agreement to understand your responsibilities.
   3. Keep Records – Save repair invoices, accident details, and correspondence.
   4. Return Vehicle Promptly – Do not keep the hire car longer than necessary.
   5. Work with a Solicitor – Legal advice helps protect your position if disputes arise.

The Future of Credit Hire in the UK

Credit hire remains controversial due to high costs and frequent disputes. Insurers argue that charges are excessive, while hire companies claim they provide a vital service for innocent drivers.

The UK government and the Financial Conduct Authority (FCA) have also looked into reforms to improve transparency and fairness. Technology, such as digital claims handling, may streamline the process in future.

Conclusion

Credit hire plays a crucial role in UK road traffic accident claims. It allows non-fault drivers to access replacement vehicles without immediate financial burden, ensuring their daily lives are not disrupted after an accident.

However, it comes with responsibilities: you must act reasonably, ensure liability is clear, and work with solicitors to protect your position. While disputes between insurers and hire companies continue, the fundamental principle remains the same: accident victims deserve fair treatment and the right to carry on with their lives without being disadvantaged by another person’s negligence.