Insurers claim many of these contracts fall foul of the Consumer Credit Act 1974, and are therefore unenforceable in law, according to David Faithful, solicitor and insurance partner with Amery-Parkes. He said if a credit hire firm could not enforce its contract with its own customers, then the contracts were also un-enforceable with the insurers of the 'guilty' third parties.
As a result, insurers have refused to pay out on many credit hire claims.
In the Dimond v Lovell test case, the County Court found in favour of credit hire 1st Automotive (now owned by Helphire), but this verdict was overturned by the Court of Appeal. In a new twist, the Court of Appeal has now given 1st Automotive leave to appeal to the House of Lords. The hearing is pencilled in for January 17, 18 and 19 next year, with a verdict expected before Easter.