Allianz wins appeal against £33,000 credit hire claim

Fleet companies should use their own available vehicles rather than entering into credit hire agreements, a landmark decision by the Court of Appeal has decided.

Credit hire firm Accident Exchange had attempted to charge £33,450 for use of a replacement car. But in a decision concluding the long-running case between Accident Exchange and insurer Allianz, the final claim was reduced to just £3,000.

Audi dealership Beechwood Birmingham Ltd, trading as Beechwood Audi, entered into an agreement with Accident Exchange under which they were to receive a commission of 10% of any credit hire recovered on behalf of their customers, as well as a commitment by the credit hire company to purchase a vehicle from the dealership for every eight hires referred to them.

When the dealership’s own Audi A6 2.7 TDi Quattro S Line saloon was damaged in an accident, they approached Accident Exchange and went on to claim £33,345.40 in special damages for the hire of a replacement prestige Audi vehicle for a period of 120 days while their vehicle was undergoing repair.

Allianz disputed the claim and demonstrated that the claimant had at least 64 other vehicles at its disposal to use instead of the damaged vehicle. At the first trial, Allianz proved there was no need for a hire car, and general damages were cut to £12,000. But at the Court of Appeal, the judge, Sir Mark Potter, cut the award further to just £3,000, ruling that it was wrong to use the spot rate for vehicles when measuring the claimant’s damages for loss of use.

He directed that the parties should agree an award of general damages based upon interest on the capital value of the motor vehicle at 5% for the period of loss, plus a modest sum for its depreciation.

Allianz motor and casualty claims manager Martin Saunders said: “This is a victory for common sense that will sit comfortably with the premium-paying policyholder. We have fought this case from the start on the grounds of reasonableness and we are very satisfied with the eventual result.”

Commenting on the case, law firm Beachcroft’s credit hire technical and business development manager, Craig Dickson, said: “The Court of Appeal firmly concluded that companies with a readily available fleet of vehicles should not enter into a credit hire agreement but should, in line with their duty to mitigate their loss, use one of their own fleet vehicles. Insurers now have a clear and decisive steer from the senior judiciary that has previously been lacking in the wealth of credit hire case law that has emerged over the last 10 years.”

Accident Exchange was unavailable for comment.