Judge dismisses £48k credit hire claim over £7k car

A driver was charged £48,000 for the temporary use of a Kia Sportage

A judge has rejected a £48,000 credit hire claim after a car worth £7,000 was written off in a crash.

David Wiltshire, 79, from Grove, Oxfordshire, was given a temporary replacement vehicle through his car insurance on 9 May 2023.

However, District Judge Richard Lumb dismissed the claim against the culpable motorist's insurers because of procedural mistakes.

Raising the question of reforming the credit hire industry, he told Oxford County Court people might be surprised by the amount claimed, given the car's value.

Credit car hire is a service where a replacement vehicle is provided on credit to a non-fault driver, with the costs claimed from the at-fault driver's insurer.

In his written ruling, Judge Lumb said: "The benefit to the credit hire company is that they can charge, often significantly, enhanced rates for providing the credit service and this has become an extremely lucrative and by and large slick business."

The case arose after a car reversed from a driveway into Mr Wiltshire's Citroen Picasso in Tenby, Pembrokeshire.

He was given a Kia Sportage as a temporary replacement by credit hire firm On Hire Ltd, the court heard.

'Staggering costs'

His insurers, acting through Winn Solicitors, which owns On Hire, tried to reclaim hire charges of £48,000 from the other driver.

However, a suitable replacement vehicle could have been hired for three weeks for £1,200, the court heard.

Mr Wiltshire only signed a credit agreement a month after the accident, the judge heard.

He awarded £1,200 to Mr Wiltshire's insurers, dismissing the rest of the claim due to "mistakes made by the claims handlers and fee earners".

The judge added: "Many people... may also question why the courts have not intervened in this industry which, given the figures involved paid out by the insurers of the culpable motorists, must surely have an impact on rising motor insurance premiums.

"Only new legislation by parliament could alter the position. Whether that will happen remains to be seen."

In another recent case, the judge condemned "staggering" credit hire costs and said the insurance industry appeared to be unwilling to campaign for reform.

In a statement, the Association of British Insurers said it was "working hard to consider measures that might reduce the cost of motor insurance claims".

The Credit Hire Organisation, which represents the industry, previously said the costs of credit hire only had a "minimal" effect on the average motoring insurance premium.

The Department for Transport and HM Treasury offered no comment, while Winn Solicitors did not respond to the BBC's approach.