Beware: The courtesy car insurance trap

By Vic Leyton

It sounds almost too good to be true doesn’t it? Within an hour of an accident that wasn’t your fault, an accident management company sweeps in, gets you a hire car, tells you the costs will be covered by the liable parties’ insurer, that you won’t have to pay an excess and that it won’t affect your insurance... just sign the form...

But stop! Hold that pen! The fact of the matter is that you may have to pay, as people are increasingly finding out.

Accident management companies capitalise on the inconsistency of insurers when it comes to providing a hire car. They play on the fact that the liable insurance provider is technically responsible for any costs, and they then provide vehicles for the innocent party at a massively inflated cost. It is indeed big business.

Without taking into account the impact that these overpriced hire bills are having on everybody’s car insurance policies, it’s important to make sure that you are entitled to that vehicle before committing ink to paper and getting behind that wheel.

It’s crucial to make the distinction between need and want here, as entitlement, unfortunately, does not extend to ‘well, they’ve inconvenienced me, I need this car.’

For example, how will the loss of a roadworthy vehicle impact your life? Remember, you will be signing a legal document saying you cannot function without this type of car. How hiring a car after an accident could cost you more than you ever imagined.

If you don’t think you could get stung by this, just take a look at the legal battle that footballer, Darren Bent faced after he got a bill for £64,000 after the other parties’ insurance provider pointed out that an international footballer with a garage full of prestige vehicles could not really have felt the same sense of loss as a pensioner who relies on her Corsa to get to the shop and back.

Something else you need to consider is how the liable insurance company has dealt with the claim. If it has offered you a suitable replacement vehicle fit for your needs and you still elect to go with an accident management company and accept a car with these inflated costs, once again you could be liable for the costs. Whilst you are not at fault for the accident, it is still an obligation to do your best to avoid any unnecessary costs.

If there is any chance you will be at all responsible for the accident, it could be very unwise to go ahead with the car hire as, under the terms and conditions of the contract you sign, you will more than likely be liable for any of the costs the other insurer doesn’t pay for.

Doubtlessly, in the event of an accident where you are not at fault, then you are entitled to feel the minimum level of inconvenience possible. But signing a deal with one of these opportunist companies though, is not always the best way forward.

Most car insurance providers these days are more than happy to accommodate reasonable requests and provide a like-for-like vehicle in the event it is clearly not your fault. You may also already have courtesy car provision in your own car insurance policy, so make sure you aware of what exactly you are entitled to and for how long.

If you’ve experienced similar problems let other readers know here.

Vic Leyton is a PR executive at Confused.com

Comments

[PaulN]

It's quite an interesting area of law, but let's face it, anybody who has ever tried to claim on a household policy knows how difficult insurers can be and HAVE to be in order to try to minimise the number of fraudulent claims. Thus, it's not fair to blame the hire companies for insurers' decisions to dispute claims. Further, the prestige market is subject to its own little quirks and the amounts involved mean that insurers are likely to try very hard to reduce a claim.

I'm not sure that ordinary members of the public will encounter these kinds of problems as hire companies have negotiated discounts as standard practice over the last decade and we haven't seen a glut of innocent victims being pursued through the courts.

The insurers and the hire companies are fully aware that anybody who can afford to hire a car will have their hire claim restricted to the reasonable cost of hiring a similar vehicle to their own from a local hire company. In other words if the hire company tells a hirer that the cost of the hire is recoverable, they are doing so against that background and are deemed to have knowledge that there are circumstances where that will not be the case. If a hire company did try to pursue a hirer for any shortfall, the client would have an 'equitable' defence to prevent this because it was the hire company's own failure to evaluate the claim fully in the light of the law that led to the shortfall and no judge would have a hard time accepting this.

Thus, quite apart from being a customer service disaster, hire companies who fail to recover the full cost of hire from an insurer rarely consider pursuing the hirer for the shortfall, usually restricted to rare cases where the hirer's dishonesty or lack of co-operation has led to a large amount of extra expense because 'equitable' defences only protect the innocent. This final factor means that hirers are still obliged to work with the hire companies to recover the hire charges or risk losing their protection but this co-operation seems only fair since by this stage they will already have benefitted from the use of the car.

Plus, many insurance disputes relate to the period of hire by accusing the individual hirers of dragging their heels (e.g. when hunting for replacements for their own written off vehicles) and we don't even see hire companies pursuing these shortfalls.

The courtesy car issue is slightly more complex. They are usually only available if you claim on your own insurance policy, which can mean you will have to pay your insurance excess up front, and they are funded by the repairing garages, not the insurers, which means that there is often restricted choice and availability (they aren't usually an option if your is not repairable) and most garages, who may be struggling to make ends meet in the current climate, would rather not have their cars out on the road clocking up miles and claims on their insurance if they can avoid it.

I suppose the upshot is that it's a big pie and everybody is fighting to keep hold of as big a piece as possible. Welcome to capitalism!

[Mr H.D.Ward]

its a great pity that good drivers are penalised for their age ie over 75 and their postal address code, as a 75 year old driver who does less than 2,000 miles a year, and does not travel at peak periods and keeps his car in a locked garage attached to the house with an alarm system on the house and garage I am penalised by parts of B36 are high vandal trouble spots and I greatly object to being classed with other area problems.I feel that drivers who are careful and look after their cars should be rewarded not disadvantaged by certain parts of their district being trouble-some

[frorthouston]

look at louis vuitton denim louis vuitton brooklyn for more louis vuitton hampstead mm to your friends