A taxi on the other side of a fault accident. A motorcycle. A client who reports a crash weeks after it happened. Each is often the first sign that credit hire costs on a motor claim are about to climb.
Chris Clapp (pictured), business development manager at basic hire rate provider All-Rates, has spent almost two decades on third-party motor claims, working for both claimants and defendants.
“Where costs start to creep more frequently is where there is a more niche or specialist vehicle involved,” he said.
Standard cars and light commercial vehicles are mostly insured by large insurers, whose non-fault arrangements with credit hire organisations tend to keep costs in check. Taxis and motorcycles are different. Those claims fall outside both those arrangements and the ABI General Terms of Agreement (GTA) far more often, and attract charges of £300 or £400 a day and upwards. Prestige and high-performance vehicles carry the same risk, with any credit hire claim pushing an already expensive loss higher.
Timing matters just as much. Where a broker handles claims directly, a fault notification with no accompanying credit hire notification can mean charges are building while remaining invisible to the broker or insurer. This is particularly true where a taxi or bike is involved. Any significant delay between the accident and notification creates the same exposure.
Storage is an increasing part of that exposure. Clapp said storage claims used to attach to roughly 15 to 20% of credit hire cases, at around £35 a day. He now sees them on about 35% of claims, with charges routinely at £50 a day and as high as £100.
Even when notification arrives late, the priority is identifying which heads of claim are still running and dealing with them as quickly as possible. Late notification tends to arise where a vehicle has been written off. Compensators can become entrenched if fraud is suspected or something about the claim feels off.
“The better thing to do is make a payment on a without prejudice basis and just kill the ongoing costs rather than having the dispute,” he said.
Outside the GTA, credit hire claims are assessed under common law, and claimant-side daily rates have no ceiling. Clapp said charges from £200 up to £800 or £900 a day are more common than the market would hope. Compensators start instead from the basic hire rate, the cost of an equivalent vehicle on the open market.
With the two sides that far apart, the claimant will typically plead impecuniosity, arguing they could not have afforded to hire on the open market. Financial disclosure should follow, but it is only required once a claim is litigated, so it rarely arrives earlier. Clapp said that missing evidence would settle 90 to 95% of the claims that reach that stalemate.
The specialist vehicles that drive cost also expose a gap in the evidence. National rental companies cover everything from microcars to commercial vans, so basic hire rate evidence for standard vehicles is readily available. For taxis and motorcycles, it is not.
Clapp said claims teams too often accept a report that no comparable rates can be found and settle on that basis. In his experience, the evidence is frequently harder to locate rather than non-existent.
Financial disclosure suffers from the same habit. Impecuniosity is often judged on a headline current account balance rather than a closer look at other accounts, credit card payments and loans. A claimant who appears short of cash may still hold an untouched credit card with a £10,000 limit.
For a market that has litigated credit hire for decades, the outcome of a claim is often set early: by what gets spotted at first notification, and by how far anyone looks before deciding the evidence isn’t there.
