Your Vehicle Replacement Options After an Accident: Credit Hire Explained

Recently, we shared a blog about how we gained a new client due to the way their previous broker mishandled a claim. The feedback from that article has been excellent, so we’ve decided to follow up with a piece focusing on replacement vehicles after an accident and what you should be aware of when navigating your options.

Claims – "I’m Not at Fault and I’ve Been Offered a Free Courtesy Car"

If you’re involved in an accident that wasn’t your fault, you’ll often receive multiple calls, texts, or letters from companies offering you a replacement vehicle. This is usually while your own car is being repaired, or while you’re waiting for settlement if your vehicle is beyond econonical to repair or written off (a total loss).

But what are your options when it comes to accepting a replacement vehicle, and what should you consider?

If your vehicle is repairable, your insurer may arrange a courtesy car usually provided through one of their approved repairers, subject to availability. This is typically offered at no or minimal cost to the insurer, but it’s not guaranteed.

The courtesy car is usually a small vehicle, such as a Ford Fiesta, so it’s unlikely to match the size, specification, or value of your own car. If your vehicle is written off (declared a total loss), you are unlikely to be offered a courtesy vehicle at all.

With a courtesy car, you’ll only need to cover fuel costs and any insurance excess if the vehicle is damaged or stolen. If you don’t need to travel far or require a like-for-like replacement, this can be a convenient and cost-effective option worth considering.

When you purchase motor insurance, you may be offered the option to include hire car cover either as part of your main policy or as an additional add-on. This type of cover provides access to a replacement vehicle while your own car is being repaired, or if it’s written off, while you wait for a settlement to replace it.

These policies usually offer different levels of cover, which may specify the size or type of vehicle provided and the length of time you can use it typically up to 14 or 21 days.

If you’re at fault for the accident, your replacement vehicle will be arranged according to the terms of your policy. However, if you’re not at fault, you will often be offered a credit hire vehicle, regardless of whether you purchased replacement car cover.

Credit hire can be a useful solution, as it often provides a like-for-like replacement vehicle. If you rely on a larger car or regularly travel long distances, this may be the most suitable option. However, it usually comes at a higher cost and may have certain limitations or conditions to be aware of.

It can take time for third-party insurers to investigate an accident and decide who is liable. Because of this, you may not receive an offer of a replacement vehicle immediately and sometimes the offer arrives after you’ve already needed one.

However, once liability is accepted and a vehicle is offered, this is often the best option for most people. The risks are minimal, and you’ll typically receive a like-for-like or equivalent-sized vehicle for the full duration of repairs, or until you receive settlement funds if your car is written off (a total loss).

In many cases, if you’re not at fault for an accident, your insurer, broker, solicitor, or repairer may refer you to a credit hire company. This is often because they receive a commission for the referral, sometimes amounting to several hundred pounds.

If you proceed, you’ll be asked to sign a credit hire agreement, which typically includes:

• Credit terms (usually allowing repayment in up to 12 instalments over 12 months if needed)
  
• A mitigation statement (confirming your need for the vehicle and agreement to manage costs responsibly)
  
• A 14-day cancellation period
  

Your Responsibilities when entering into a credit hire agreement, you have a legal duty to:

• Be honest about your need for the replacement vehicle
  
• Assist the credit hire company in recovering costs from the at-fault party’s insurer
  
• Provide necessary documentation, including your driving licence, insurance certificate, vehicle V5, and—if you cannot afford to hire a vehicle privately—proof of financial means (such as bank statements or loan details)
  

If the credit hire company cannot reach a settlement with the third-party insurer, they may need to issue legal proceedings in your name. You will be required to support this process, though in most cases you won’t have to pay anything unless you fail to cooperate or provide misleading information.

Things to Consider

• Credit hire is a legally binding contract, so it’s essential to read and understand the terms before signing.
  
• In most cases, credit hire offers access to a like-for-like replacement vehicle, which can be the best option if you need a larger or specialist car.
  
• If you’re happy to support the recovery process and agree to the terms, credit hire can be a practical solution when you’re not at fault for an accident.