Understanding Credit Hire Agreements
When you are involved in a road traffic accident that was not your fault, continuity of mobility is often essential for work, family and daily life. A credit hire agreement is designed to bridge that gap without you having to pay upfront. As personal injury solicitors, our role is to ensure you understand how these agreements operate, what is expected of you, and how to protect your position so that hire charges are recovered from the at‑fault insurer wherever possible.
What is a credit hire agreement?
A credit hire agreement is a post‑accident vehicle hire arrangement that provides you with a like‑for‑like replacement vehicle immediately, without any payment at the point of hire. You sign a contractual agreement to pay the hire charges on a deferred basis. The credit hire company then seeks to recover those charges from the insurer of the driver responsible for the accident as part of your overall loss.
How does a credit hire agreement work in practice?
Following the accident, a credit hire provider supplies a replacement vehicle and asks you to sign a credit hire agreement. The agreement records the terms of hire, including the daily rate, vehicle class, excess and your obligations to co‑operate and mitigate losses. You do not pay at the outset. Instead, the credit hire company pursues recovery of the hire charges from the at‑fault insurer. If liability is admitted and the hire is shown to have been necessary, reasonable in rate and duration, and properly mitigated, those charges are ordinarily recoverable as part of your claim.
Why use credit hire?
Credit hire enables you to remain mobile even if you cannot afford to fund a rental yourself. It is particularly helpful where you need a similar class of vehicle for work or family commitments, and where your own comprehensive insurer does not provide an adequate courtesy car. Properly managed, credit hire minimises disruption while shifting the cost recovery process to the at‑fault insurer.
How costs are recovered from the at‑fault insurer
The credit hire company, often working alongside us as your solicitors, will collate accident details, engineer’s reports, repair invoices, hire documents and evidence of need, and present a claim to the at‑fault insurer for the hire charges. They will justify both the rate and the period of hire by reference to the type of vehicle required and the time reasonably needed for repair or settlement. The insurer may seek to negotiate the rate or duration. If dispute remains, proceedings can be issued, and the court will assess whether the hire was reasonably incurred and properly mitigated. Your prompt co‑operation and accurate disclosure are critical to success.
Common areas of dispute and how to protect your position
Insurers frequently challenge several aspects of credit hire. You can materially strengthen your claim by addressing the following from the outset.
Hire rate. Insurers may argue the credit hire rate is higher than standard “basic hire” rates. If you could not reasonably fund a basic rental upfront, that may justify recovery of the credit hire rate. Keep any quotes you obtained and be prepared to explain why a pay‑on‑return arrangement was necessary in your circumstances.
Duration of hire. The hire should last no longer than reasonably necessary. Return the vehicle promptly once your car is repaired, written off and settled, or when an adequate alternative is available. Keep all repair updates, total loss valuations and settlement correspondence to evidence why the period was necessary.
Need for a replacement vehicle. Be prepared to explain why you needed a vehicle at all, for example for commuting, childcare or business. If you had access to another suitable vehicle, the insurer may contend that no hire was required or that a shorter period was reasonable. Record any limited or temporary alternatives you tried and why they were unsuitable.
Type of vehicle. The replacement should be broadly comparable to your own. Upgrading to a larger or more luxurious model can reduce recoverability. If a like‑for‑like vehicle is unavailable, confirm in writing why the supplied vehicle was the nearest suitable alternative.
Mitigation of loss. You have a legal duty to take reasonable steps to keep losses down. Consider any reasonable, safe and genuinely comparable alternative offered by the at‑fault insurer. Tell us immediately if you receive an “intervention” offer so we can advise whether accepting it is prudent. End the hire as soon as it is no longer needed, and comply with any reasonable steps to facilitate repairs or settlement.
Impecuniosity and why it matters
A key question is whether you could realistically afford to pay for a basic rental upfront and await reimbursement. If you could not, you may be entitled to recover the credit hire rate rather than a lower “basic hire” rate. Proving this typically requires disclosure of recent bank statements and income information. We will advise you on the evidence likely to be needed and how it is used, and we will only disclose what is necessary to support the claim.
Your obligations under the agreement
By signing a credit hire agreement, you accept contractual duties. Read the terms carefully. Keep the vehicle in good condition, observe mileage and insurance conditions, pay any fixed penalty charges incurred, and notify the provider and us immediately of any change in circumstances. Failure to co‑operate with reasonable requests for information or to return the vehicle when no longer needed can undermine recovery and, in some cases, expose you to personal liability for avoidable charges.
Practical steps to maximise recovery
Document everything. Keep repair reports, total loss letters, settlement offers, hire invoices and correspondence. Communicate promptly. Tell us about any insurer intervention offers, delays, or changes in your need for a vehicle. Choose appropriately. Accept the nearest suitable like‑for‑like vehicle and avoid unnecessary upgrades. Return promptly. End the hire as soon as repairs complete or a total loss settlement is paid. Be transparent. If asked, provide the financial documents we identify as necessary to evidence need and impecuniosity.
What if the insurer refuses to pay?
If the at‑fault insurer disputes liability, rate, duration or need, we will advise on prospects and, where appropriate, issue proceedings to recover the charges alongside your wider losses. Most disputes resolve through negotiation. Where litigation is required, the court will examine the evidence on need, rate, duration and mitigation. Your careful adherence to the guidance above will be central to the outcome.
We can help
If you have any queries regarding a credit hire agreement or you are facing a dispute about payment, please contact our expert dispute resolution team at PA Duffy Solicitors in Belfast, Dungannon and Omagh for tailored advice. Telephone 02887722102 or email enquiries@paduffy.com.