However, under common law anyone who is involved in an accident
for which someone else is adjudged to be at blame can make a
claim for compensation, either from that person or that person's
insurers, for a sufficiently large sum to put them back into the
same or a similar financial situation that they were in before
If an accident occurred
and the injured party's car needed to be repaired, that would
mean that they would be without a vehicle until the work had
been completed and the car delivered back to them. They would
need a loan car to use until this had been done, but where would
they find one?
Meet the credit hire companies. They exist to loan cars to
motorists in this situation, and they make their income from
charging their fees to the insurance company that covered the
person responsible for the accident.
This would be okay if their fees weren't so heavy. On average
however this adds up to an eye-popping £1500 per claim!
It isn't just the hire company which is doing well out of this
deal either. It is quite likely that the garage concerned tipped
them off, and received a commission of several hundred pounds
for doing so.
Some industry insiders have speculated, no doubt erroneously,
that there is often a delay before one of these companies can
deliver a replacement vehicle so that repairs cannot be started
before a weekend; meaning that the hire period extends for
another two days. It is also sometimes very strange to hear
about cars being sat in garages for a long while 'waiting for
parts' when these are easily available from companies who
operate very fast deliveries, often several times per day. In
the meanwhile the bill that the credit hire company will be
presenting to the insurance company is getting bigger and
One could feel very sorry for the insurance companies, if it was
not for the fact that so many of them pass on their clients'
details to these car hire firms themselves; in exchange, of
course, for a fat fee. After all, it is the customer, namely you
and I, who will be picking up the bill at the end of the day,
it has been estimated
that every single car insurance premium in Britain is inflated
by £44 in order to pay the bills of credit hire companies.