FOS is warning that many consumers do not understand the risks of credit hire, which could leave them facing large bills. Credit hire is used as an alternative to claiming on motor insurance, and involves claims or accident management companies repairing the car or helping with a replacement under a credit agreement. But these agreements provide that the company can recoup costs from the consumer if it cannot recover them from the other driver’s insurer, even if that other driver is at fault. The costs can be high and unexpected.
Even more worryingly, consumers have told FOS that the agreements were unclear and they did not know they could end up paying costs, and also that they were not aware they were not actually claiming under their insurance. It gave an example of a driver whose insurer referred her to a credit hire provider for a courtesy car while her car was repaired after an accident that wasn’t her fault. It was only when the credit hire company asked for her help in recovering costs that she realised the risks, which had not been explained to her – she said that if they had been, she would not have asked for a courtesy car. FOS found in her favour.