Speakers' Corner

The Courtesy Car Insurance Trap: A Response

Not so long ago, we warned about the hire car trap drivers should be aware of after suffering a breakdown or accident. Now one industry expert tells Confused.com his side of the story, and offers some tips to prevent you from getting stung.

Insurers often blame accident management companies (ACMs) for increasing insurance premiums, but almost every insurer in the UK - and most brokers - use them. So how do you tell the good from the bad? What service can you expect, and what should you do to keep things running smoothly?

ACMs fill the gap in the market by offering like-for-like hire cars after an accident, and providing injury services, as well as vehicle repairs. They have grown into a £1 billion market in the past 20 years – and handle roughly 800,000 hires a year.

They also specialise in making quick and accurate decisions on liability (in other words, who is to blame in an accident), and have focused on insurance companies’ weaknesses by de-skilling their industry and reducing staffing levels or offshoring to India to cut cost.

The end service you will receive by these companies is usually the same – a new or nearly new car, delivered to your home or work. But the costs these companies charge back to the other person’s insurance company can vary vastly. Some ACMs are better and more ethical than others. 

So how do you know the right ones to choose?

The biggest area some ACMs look to make more money is by delaying the repairs, or hire period. More hire days = more money for them. The industry average for a hire should be around 16/17 days, so keep that in mind, and if in doubt ask the ACM or your insurer.

Secondly make sure you get placed with an ACM that is subscribed to the Association of British Insurers’ General Terms of Agreement (or ABI GTA) – that’s their code of conduct that requires them to keep a closer eye on hire periods. You can ask them how many cases they end up taking to court each year. The more an ACM does, they more likely they are to have an aggressive stance with insurers.

Finally, if you are injured make sure you ask about the financial arrangements being made. How much commission is the solicitor paying for the claim and to whom? If you’re asked to sign a legal policy or after the event insurance (also known as ATE) again, shop around.

In summary, many ACMs provide a genuine service and maintain a good relationship with insurers, but many don’t. Just watch out for those ever increasing hire periods and, if in doubt, ask questions.

David Sandhu is CEO of Ai Claims Solutions PLC

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