Replacement Car Costs in the UK: Who Pays and When?

When you’re involved in a road traffic accident in the UK, one of the first questions that comes to mind is: “What happens to my car, and how do I get back on the road?” For many, the idea of being without a vehicle is unthinkable—especially if you rely on it for commuting, school runs, or running your business. This is where a replacement car or credit hire vehicle comes in.

But the issue isn’t as simple as just being handed a temporary car. The big question is who pays for the replacement vehicle, how much it costs, and under what circumstances you’re entitled to one. In this guide, we’ll break down everything you need to know about replacement car costs in the UK, including the role of insurance companies, credit hire firms, and accident fault determination.

1. What is a Replacement Car?

A replacement car is a temporary vehicle provided to drivers whose own car is unavailable due to an accident, repair, or being written off. In the UK, these cars are usually arranged through:

• • Your own insurance company (if you have courtesy car cover).
  • The at-fault driver’s insurance (if the accident wasn’t your fault).
  • A credit hire company, which provides a car on credit while waiting for the claim to be settled.

Replacement cars are intended to keep you mobile until your own car is repaired or you receive a settlement for a total loss.

2. Who Pays for a Replacement Car?

The answer depends largely on who was at fault for the accident and what type of insurance policy you hold. Let’s look at different scenarios:

a) If the Accident Was Not Your Fault

• • You are entitled to a like-for-like replacement vehicle, paid for by the at-fault driver’s insurer.
  • For example, if you drive a BMW 3 Series, you should not be expected to make do with a small hatchback. Instead, you can expect a similar vehicle.
  • The costs are usually recovered directly from the other party’s insurer.

b) If the Accident Was Your Fault

• • Your insurer may still provide you with a courtesy car if it is included in your policy.
  • However, the costs will not be claimed from the other party and may be limited to a small hatchback regardless of what you drive.
  • If you didn’t opt for courtesy car cover, you may need to rent one at your own expense.

c) If Liability is Unclear or in Dispute

• • A credit hire company may step in and provide a car on a “no win, no fee” basis.
  • You won’t pay upfront, but if it’s later proven you were at fault, you may become responsible for the hire charges.

3. How Much Do Replacement Cars Cost in the UK?

Replacement car costs vary based on:

• • Type of vehicle (small hatchback vs. luxury car).
  • Hire duration (a few days vs. several weeks).
  • Location (prices in London may be higher).

Typical credit hire costs:

• • Small hatchback: £30–£50 per day
  • Family saloon: £60–£100 per day
  • Prestige or luxury vehicles: £150–£300+ per day

Insurance companies often negotiate lower rates with hire companies, but in credit hire cases, costs can escalate significantly—sometimes leading to legal disputes between insurers.

4. Courtesy Car vs. Credit Hire Car

Many people confuse a courtesy car with a credit hire car, but they are different.

• Courtesy Car

  • Provided by your insurance company or repair garage.
  • Usually a small, standard car.
  • Free if included in your policy.
  • Available only while your car is being repaired (not if written off, unless you have enhanced cover).

• Credit Hire Car

  • Provided by specialist accident management companies.

  • Like-for-like replacement vehicle.

  • Costs are recovered from the at-fault driver’s insurer.

  • Available until claim settlement, which may be weeks or months.

5. When Can You Get a Replacement Car?

You are entitled to a replacement car in the following situations:

• • Your policy includes a courtesy car benefit.
  • The other driver was at fault, and their insurer accepts liability.
  • You go through a credit hire company, even if liability is still being investigated.

However, you might not get one if:

• • You only have third-party insurance and no courtesy car cover.
  • Your insurer doesn’t provide courtesy cars for “total loss” claims.
  • You decline credit hire due to potential risks.

6. Who Really Pays? The Legal Side

In UK law, the at-fault driver’s insurer is responsible for covering the reasonable costs of a replacement car. The keyword here is reasonable.

For example:

• • If you normally drive a modest hatchback but insist on hiring a luxury vehicle, the insurer may dispute the cost.
  • If you use a credit hire firm and keep the car longer than necessary (e.g., after your claim is settled), the insurer may refuse to cover the extra days.

Courts generally side with the principle that victims should not be left worse off, but they also prevent abuse of the system.

7. Common Issues with Replacement Car Costs

Replacement car arrangements in the UK are not always straightforward. Some common problems include:

• • Disputes over fault: If liability is contested, you may be stuck in limbo.
  • Excessive credit hire costs: Insurers often argue that daily hire charges are inflated.
  • Delays in repairs or settlement: The longer the process, the more the costs escalate.
  • Risk of being liable: If a case doesn’t go in your favour, you might end up owing thousands in hire fees.

8. Real-Life Example

Imagine Sarah, who drives an Audi A4, is hit by another driver who admits fault.

• • Sarah’s insurer works with a credit hire company to provide her with a similar Audi.
  • The hire cost is £150 per day, and she keeps the car for 30 days while her vehicle is repaired.
  • Total cost: £4,500.
  • The at-fault driver’s insurer pays the bill.

Now imagine the other driver disputes liability.

• • Sarah still gets the car on credit hire.
  • If later it’s decided she was at fault, Sarah could be personally liable for the £4,500 bill.

9. How to Protect Yourself from Replacement Car Cost Issues

• • Check your insurance policy – Make sure you have courtesy car cover or even an “enhanced courtesy car” option.
  • Confirm liability early – If possible, ensure the other driver’s insurer accepts fault before taking a credit hire car.
  • Be reasonable – Choose a replacement car similar to your own, not more expensive.
  • Keep records – Document your need for the vehicle (work, family, medical reasons).
  • Return the car promptly – Once your car is repaired or a settlement is made, return the replacement vehicle immediately.

10. Frequently Asked Questions

Q1: Can I choose any car as a replacement?

Not always. You are entitled to a like-for-like car, but insurers may argue if you demand a higher-class vehicle.

Q2: What if I only have third-party insurance?

You won’t get a courtesy car from your own insurer. However, if the other driver is at fault, their insurer (or a credit hire company) may still provide one.

Q3: Can I keep the replacement car if my car is written off?

Yes, but usually only until you receive your insurance payout. After that, costs may not be covered.

Q4: Will I need to pay upfront for a credit hire car?

No. Costs are claimed from the other party’s insurer. But if liability goes against you, you may face the charges.

Final Thoughts

Replacement car costs in the UK can be confusing, but the basic principle is clear: if the accident wasn’t your fault, the at-fault driver’s insurer should cover the costs. If it was your fault, your options depend on your insurance cover.

The biggest takeaway is to always be cautious with credit hire cars. While they provide convenience, the costs can be sky-high, and disputes may leave you personally liable. Before accepting one, confirm who is paying, what the daily rate is, and how long you can keep the vehicle.

By understanding your rights, knowing what your insurance policy includes, and making smart decisions, you can ensure you stay mobile after an accident—without facing unexpected bills.