Fleet News

Credit hire cost appeal dismissed

The Court of Appeal has dismissed a claim for hire car costs involving credit hire firm Accident Exchange.

The Court dismissed the Appeal by Accident Exchange in the case of Stevens v Equity Syndicate Management, and the result means where the claimant is considered pecunious, insurers could see significant reductions in the hire charges claimed and in many cases those reductions could be as much as 50%.  

Insurance company ERS says the case could bring to a stop to the inflated rates that Credit Hire Organisations (CHOs) have been allowed to charge in recent years.

The case involved a credit hire vehicle provided by Accident Exchange at a cost of £194 per day, and a total cost of over £5,000 for a 28 day period, and gave the Court the opportunity to give clear guidance on the amounts that could be recovered.

Lord Justice Kitchin accepted that judges were still experiencing practical difficulties in calculating the Basic Hire Rate and sought to provide absolute clarity on matters by stating that “The search must … be for the lowest reasonable rate quoted by a mainstream supplier for the basic hire of a vehicle of the kind in issue to a reasonable person in the position of the claimant.” 

Claims director Peter Smith said: “This judgment leaves absolutely no room for ambiguity in determining the correct sum payable for hire to the pecunious claimant, and that sum should be the lowest rate quoted by a mainstream provider. It is a true common sense approach that represents what a reasonable person in the position of the claimant would do. 

Ian Davies, divisional manager at Lyons Davidson who represented ERS, echoed Mr Smith:  “The judgment is a significant success for ERS and the Defendant Insurance Industry as a whole in their on-going battle to kerb the extortionate costs of credit hire and in part deals with the failure of the recent CMA report to address the issue of credit hire.

“The judgment provides much needed practical guidance to all stakeholders in calculating the basic hire rate and provides the definitive judgement so long desired by the lower courts and will help with settlement of these types of claims.”

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Comments

  • Prestige Car Druver - 27/02/2015 13:18

    Accident Exchange have done a good job in providing prestige car drivers with a like for like vehicle after a non fault accident, but their profits are high. Has this judgement changed the rates Tier 1 suppliers can charge the ABI insurers now?

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