Credit Hire: Understanding What It Is and Its Relationship with Courtesy Cars
When individuals in the UK are involved in a non fault road accident, they often require a replacement vehicle while their own car is being repaired or replaced. This is where the concept of credit hire comes into play. Credit hire is a service that provides a temporary vehicle to a non fault accident victim on a credit basis, with the costs later recovered from the at fault party's insurer under UK law.
In this article you will explore the details of credit hire, how it works within UK regulations, and its relationship with courtesy cars, helping you understand your rights and options when faced with such situations.
What is Credit Hire?
Credit hire is a legal arrangement where a non fault driver involved in an accident receives a replacement vehicle without having to pay upfront. Instead, the credit hire company covers the cost and later recovers it from the at fault driver's insurer. This arrangement allows accident victims to continue their daily activities without financial strain while waiting for their vehicle to be repaired or replaced.
How Credit Hire Works in the UK
- Eligibility Check – The credit hire provider assesses whether the driver qualifies for a replacement vehicle based on liability, insurance coverage, and need.
- Vehicle Matching – A like for like replacement vehicle is provided to ensure minimal disruption to the driver's routine.
- Agreement Signing – The non fault driver signs an agreement stating that the hire costs will be claimed from the at fault party’s insurer.
- Duration of Hire – The credit hire vehicle is available until the original car is repaired or the insurance claim is settled.
- Cost Recovery – The credit hire company liaises with the at-fault insurer to recover the costs. In cases of disputes, legal action may be taken under UK law.
Relationship Between Credit Hire and Courtesy Cars
Many people confuse credit hire vehicles with courtesy cars, but they serve different purposes. Understanding their differences can help accident victims make informed choices.
What is a Courtesy Car?
A courtesy car is a temporary replacement vehicle provided by a garage or insurance company while a damaged car is being repaired. Unlike credit hire vehicles, courtesy cars are typically offered as part of an insurance policy and are not always an exact match for the original vehicle.
Key Differences Between Credit Hire and Courtesy Cars
Feature | Credit Hire Car | Courtesy Car |
Eligibility | Provided to non fault accident victims | Available if included in an insurance policy |
Cost | Costs recovered from at-fault insurer | Usually free but limited to policy terms |
Vehicle Type | Like-for-like replacement | Basic model, not necessarily a match |
Provider | Credit hire company | Insurance or repair garage |
Duration | Until claim is settled or repairs complete | Limited period, often shorter |
When to Choose Credit Hire Over a Courtesy Car
- No Courtesy Car in Your Policy – If your insurance does not provide a courtesy car, credit hire ensures you still have transport.
- Need for a Like-for-Like Vehicle – If you require a similar vehicle type (e.g., a commercial van for business use), credit hire is a better option.
- Longer Repair Times – Courtesy cars are often available for a limited period, whereas credit hire lasts until settlement.
- Third-Party Insurance Claims – When claiming against an at fault driver’s insurer, credit hire enables cost recovery without affecting your policy.
Pros and Cons of Credit Hire Vehicles
Pros | Cons | |
Immediate replacement car | Higher costs inflate insurance premiums long-term | |
No upfront payment | Risk of liability disputes delaying repayment | |
Often includes like-for-like vehicles (e.g., SUVs, vans) | Pressure to use affiliated repairers |
UK Legal Framework for Credit Hire Relevant Laws and Regulations
- The Road Traffic Act 1988 – Ensures that all drivers have at least third party liability insurance, which covers damage to other vehicles and property.
- The Civil Liability Act 2018 – Governs how personal injury and associated claims, including credit hire costs, are processed.
- Mitigation of Loss Principle – Under UK law, claimants must prove that hiring a replacement vehicle was necessary and that they did not incur unreasonable costs.
Legal Precedents
Several UK court cases have shaped how credit hire claims are handled:
- Dimond v Lovell (2000) – Established that credit hire costs must be reasonable and necessary.
- Lagden v O'Connor (2003) – Recognized that financially vulnerable claimants can recover higher credit hire costs if they cannot afford upfront rental payments.
- Stewart v Glaze (2009) – Highlighted the need for clear evidence supporting the necessity of credit hire.
Common Misconceptions About Credit Hire
1. Credit Hire is Free: While there is no upfront payment, the hire company expects to recover costs from the at fault insurer. If liability is disputed, the non fault driver may need to assist in legal proceedings.
2. All Insurers Cover Credit Hire Costs: Not all insurers willingly pay credit hire claims. Some may challenge the necessity of the hire or the rates charged, leading to legal disputes.
3. A Courtesy Car is Always Available: Many insurance policies have restrictions, such as providing a courtesy car only if the repair is done at an approved garage.
4. Credit Hire is Only for Luxury Vehicles: Credit hire applies to all vehicle types, including standard cars, commercial vehicles, and taxis.
The Financial and Legal Implications of Credit Hire in the UK
Financial Considerations
- Impact on No Claims Discount (NCD) – Since the cost is claimed from the at-fault insurer, the non fault driver’s NCD remains unaffected.
- Potential Costs in Disputed Cases – If liability is unclear, the driver may face delays or legal costs.
- Higher Hire Rates – Credit hire rates are often higher than standard rental prices due to the risk taken by hire companies.
Legal Considerations
- Court Proceedings – If an at-fault insurer refuses payment, the hire company may take legal action, requiring the non fault driver’s cooperation.
- Consumer Rights – Under UK law, accident victims have the right to recover reasonable costs incurred due to an accident caused by another party.
Tips for London Drivers Considering Credit Hire
- Check Your Policy First: Many insurers include replacement car cover. Using this avoids credit hire markups.
- Verify Liability ASAP: Don’t accept a credit hire car until the at fault party’s insurer admits liability.
- Negotiate Hire Periods: Challenge unreasonable delays (e.g., waiting 2 weeks for a bumper repair).
- Keep Records: Save emails, repair estimates, and mileage logs to counter disputed charges.
Alternatives to Credit Hire
- Courtesy Cars: Often included in comprehensive insurance policies.
- Pay-and-Recover: Rent a car yourself and claim costs later (requires upfront payment).
- Public Transport Loans: Some insurers offer cash for Tube/bus fares instead of hire cars.
Conclusion
Credit hire plays a crucial role in ensuring that non fault accident victims in the UK can continue their daily activities without financial burden. While courtesy cars provide a convenient option for those with insurance coverage, they may not always be sufficient for individuals needing a like for like replacement or extended hire periods.
Understanding the differences between credit hire and courtesy cars, along with the legal rights under UK law, helps drivers make informed decisions about their mobility options following an accident. By choosing the right solution, non fault drivers can minimise inconvenience while ensuring that the costs are justly recovered from the responsible party.
Marigold Services provides the best credit hire solutions with zero upfront costs, ensuring you stay mobile while we handle the rest. Trusted across London, we deliver fair rates and 24/7 support for non fault drivers.