Increases in claims made by credit hire companies are adding £20 to car insurance premiums, on average, reports Zurich Insurance.
These companies provide vehicles on loan to drivers whose cars have been damaged, and then recoup the cost from the insurer of the driver “at fault” in the incident.
Some insurers are now claiming that the amounts they are being billed are unreasonable, and refusing to pay – which means that more of these cases are ending up in court.
Credit hire firms say that they are charging according to a formula that has been agreed, and that insurance firms end up incurring costs through late payment penalties.
An Essex woman, Beverley Hope-Smith, was advised to contact a credit hire company when her car was damaged in an accident, in which she was not at fault.
Being the innocent party, the credit hire firm informed her that she would not be responsible for paying the cost of the replacement vehicle.
She was told that costs would be claimed from the insurer of the driver at fault in the accident. Although her car was worth only £4,000 at the time of the accident, it took more than three months to complete the repairs – and the final car hire bill amounted to £16,000, or an average of £200 per day.
Hope-smith told the BBC’s Money Box programme that she was amazed that this had been allowed to occur: “I was absolutely speechless. It seemed to me that either the accident management company or the other insurer at some point must have said ‘does it really take three and a half months to repair a vehicle?’”
Thanks to news.bbc.co.uk for the above quotes, for more information on this article please visit their website.
www.zurich.co.uk
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