An accident could leave you without the use of your car, meaning you might need a replacement to keep you on the road. At least until your car is repaired or you get a settlement.
If the accident wasn’t your fault, you might be offered a courtesy car or a credit hire car. But what’s the difference and why is it important?
What is a credit hire car?
You can add credit hire car cover to most car insurance policies, as an optional extra.
Credit hire is when you’re given a replacement car, but no money changes hands until the hire is over.
If you weren’t at fault for an accident, your insurer might offer you a credit hire car, and plan to claim the costs back from a third-party insurer.
Many insurers offer ‘like-for-like’ hire because they feel it’s the best way to look after their customers.
This means they might try to put you in a hire car that’s as similar to your own car as possible. This could happen even if it’s a souped-up prestige motor that costs an arm and a leg to hire.
However, you should look into what you’re actually being offered, and how much it’s going to cost. There’s always a chance those charges could be disputed and come back to you.
The way credit hire works is that the company leasing out the car provides you with a replacement and have you sign for it.
Once the hire is over, they send an invoice of the daily charges over to the insurer of whoever was at fault for the accident.
The issue is there’s no guarantee that the at-fault insurer will accept liability and/or the charges. In that case all the bills could then fall to you.
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Credit hire cars vs courtesy cars
The main difference between a courtesy car and a credit hire car is that the replacement vehicle should be closer suited to your needs with a credit hire car.
In a nutshell, you’re usually offered a courtesy car if your own is damaged but repairable.
A courtesy car is just that – a courtesy.
It’s a replacement, usually provided by the garage that’s carrying out the repairs, and is generally a small-engine hatchback.
Insurers often offer courtesy cars with comprehensive car insurance, or as additional extras, though they usually come with some conditions.
It could depend on you agreeing to use one of their approved garages, and it usually subject to availability.
But if you need a large car to help ferry the kids to and from school, you shouldn’t be left having to squeeze your family into a 3-door hatchback.
But if you have hire car cover as part of your policy, you should get a replacement car if either of these things happen.
A hire car might see your insurer try to charge the at-fault insurer for the charges. And if the at-fault insurer doesn’t accept liability, you could leave yourself with a nasty bill.
This means you should only really take out a credit hire car if there’s no doubt about who was at fault for the accident.
Whereas with a courtesy car, you shouldn’t have to fork out any money. You still need to pay for petrol, though.
How much do credit hire cars cost?
Credit hire is billed on a daily basis and the cost depends on the type, specs and value of the car.
Insurers usually try to get you a car identical or similar to your own. If they can’t get you an identical model, they should try to give you one from a similar group.
Credit hire claims can get so expensive that a set of opt-in rules have been written by the Association of British Insurers (ABI) to govern how they’re handled.
Daily costs, even when limited by these rules, vary massively.
Vauxhall Corsa 1.2
Ford Galaxy 1.9
Porsche Cayenne 3.2
Rolls Royce Phantom
Prices taken from GTA and are correct as of 29/4/22
What are the drawbacks of credit hire?
The main risk with credit hire is that when you sign for the car, the costs tend to be in your name.
As daily charges build up, you're the one responsible for them until an insurer accepts liability and agrees to all the costs.
If it turns out that you’re at fault for the accident, or these costs are disputed by the other insurer, the credit hire company might look to you for payment.
Should I choose credit hire or a courtesy car?
If you’re at fault for a car accident, chances are you won’t be able to get a credit hire car.
But if you weren’t at fault, should you choose a credit hire or a courtesy car?
It all comes down to individual circumstance.
If you need a ‘like-for-like’ car and wouldn’t be able to manage with a smaller vehicle, choosing a credit hire could suit you.
But remember – you should only take out a credit hire if liability for the accident is in no doubt.
If you don’t need a ‘like-for-like’ car, a courtesy car could be the better option.
And if you’re worried about liability and a potential bill, stick with a courtesy car.
What are the rules of credit hire?
There are dozens of rules, from making sure the hire only lasts as long as it needs to, to the type and cost of the car provided.
For example, you might have crashed an Audi TT, which costs £200+ per day to hire. But if a 1-litre Astra at £40 per day would suit your needs, the rules say you should take the cheaper option.
Problems arise when customers aren’t told or don’t understand these rules, and the at-fault insurer starts to dispute the charges.