This sets out the arrangement by which insurers claim costs from each other after an accident, and for the first time acknowledges the significant cost which replacement cars represent and which has been a long-time bone of contention with bodyshops.

Under an agreed common approach, the memorandum declares: 'The cost of providing a courtesy car, whether or not it is included in the charge-out rate, should be accepted as part of subrogated claims between insurers.' Previously some insurers have forced bodyshops to provide courtesy cars free of charge, and repairers have had to incorporate this charge in their overheads.