Fleets have been warned to be extra careful when using credit hire to replace vehicles taken off the road by a no-fault crash.
Typically when company drivers are involved in a crash that is not their fault, they are entitled to a replacement vehicle on credit hire while their vehicle is replaced.
However, the Court of Appeal has ruled that companies with access to any spare vehicles – such as a fleet with pool cars – must not take advantage of credit hire. If they do, they may not be entitled to recover the costs.
“The Court of Appeal decision casts significant doubt over a company’s ability to recover hire charges following a non-fault accident,” explained Denny Payton partner at the law firm HarveyIngram.
“The decision could have far reaching consequences for corporate fleets and vehicle hire firms. The scope of the decision is not limited to credit hire claims and is relevant to traditional corporate hire claims.”
The thrust of the 17-page judgement between car dealer Beechwood Birmingham and Hoyer Group is that a company should mitigate its loss following an accident by ensuring any spare vehicles are used before incurring hire charges, explains Payton.
This case involved a car dealer rather than a fleet, but the decision will apply to any company with vehicles.
“This case could have a significant impact on the fleet rental market as insurers now have a clear argument in situations where they can prove that a company had spare capacity,” said Payton.
Beechwood had claimed £30,000 in credit hire charges despite having a large stock of cars. The damaged vehicle, an Audi A6 Quattro, was being driven by a manager when it was involved in a collision.
The court ruled that a replacement vehicle could have been sourced from an available pool of 64 cars and therefore there was no need to hire a separate vehicle.