New ruling to ensure credit hire claimants must provide evidence of financial means

In a significant development for the credit hire industry, a new ruling from the High Court last week (04 April 2023) will now require credit hire companies to voluntarily provide evidence of impecuniosity upon reasonable request at the pre-litigation stage.

The ruling comes as a result of a six-year strategic initiative led by law firm Keoghs – along with its client Allianz – to enforce requests for impecuniosity disclosure before litigation proceedings begin.

The ruling is expected to bring further transparency to the credit hire industry and “reduce friction and unnecessary legal costs from the process of settling credit hire claims,” said Allianz Insurance.

The significance of a claimant’s financial situation in a credit hire case dates back two decades, when the courts established a rule that a “impecunious” claimant was entitled to claim the complete credit hire rate, rather than being limited to the rate offered by a standard retail hire firm.

The financial disparity between the complete credit hire rate and the standard retail rate is “usually substantial”, meaning that the financial means of a claimant ordinarily has a “significant impact” on the amount recoverable in a claim, according to Keoghs.

Gary Herring, partner and head of credit hire strategy at Keoghs, said he was “extremely pleased” with the decision of the High Court.

“In particular, we would expect the unhelpful practice by some large credit hire organisations of avoiding addressing the issue of impecuniosity at the pre-litigation stage to immediately stop,” he added.

Anthony Hughes, chair and chief executive of the Credit Hire Organisation, exclusively told Insurance Times: “Speeding up the process is a good thing for all parties certainly for customers – who get their claim settled quicker – and our members, [who] can reduce the life cycle of the claim and get paid quicker.

”This issue could be explored further by our members and insurer partners as we continue our joint work updating the general terms of agreement (GTA) for the credit hire industry – a voluntary protocol which is designed to improve the processing and settlement of credit hire cases.

“Ultimately, insurers and credit hire companies serve the same customer – our primary aim is to provide them with access to mobility so that they can get on with their lives while their own vehicle is off the road and that we settle the claim with the at-fault insurer with the minimum of hassle.

“Holt v Allianz may have provided a further opportunity to do just that.”

Case details 

The case that led to the ruling involved an appellant, Johnathon Holt, who rented a car from Auxillis on credit hire terms for a 25-day period after being involved in a road traffic accident caused by another driver’s negligence.

The respondent’s insurance company – Allianz – accepted liability for the accident but provided evidence to show that the going rate to rent an equivalent car on ordinary rental terms was significantly lower than the amount claimed by Auxillis.

Allianz then requested documentation to support Auxillis’ claim of impecuniosity, which the credit hire company refused before threatening litigation instead.

As a result, the insurer sought pre-action disclosure of the appellant’s financial information, including bank statements, credit card statements, savings account statements and wage slips for the relevant period.

The court granted the application for pre-action disclosure and the appellant sought permission to appeal.

The judge granted permission, citing a divergence of practice between different courts in similar credit hire cases.