Insurer doesn’t warn consumer of credit hire/repair risks

Motor Insurance

Suzie complains her insurer referred her to credit hire/repair services without explaining the risks involved.

What happened

Suzie’s parked car was hit by a third-party. When she called her insurer to claim, they offered their ‘non-fault’ service to her, provided by an independent credit hire/repair company. This included a like-for-like hire car and repair service.

Suzie knew she was claiming outside her motor policy, but complained her insurer didn’t tell her she’d be unlikely to have access to alternative dispute resolution (such as our service) in case things went wrong.

The credit hire/repair company were short of cars, and it took four weeks to arrange both the hire car and repairs. Unhappy with the service, she referred her complaint to us.

What we said

As the ‘non-fault’ service was provided under an unregulated credit agreement, we had to tell Suzie we couldn’t investigate the quality of the hire/repair service. But we could look at the insurer’s referral to the service.

We found the insurer should have told Suzie she wouldn’t have any recourse to alternative dispute resolution if things went wrong. We also found Suzie needed a car, but didn’t have courtesy car cover under her motor policy.

We asked Suzie what she’d have done if her insurer informed her of all her options when she called them. She said she’d have still picked whatever option that resulted in a replacement car. We thought Suzie would have likely still chosen to use the non-fault service, even if her insurer informed her of all the main risks.

We upheld Suzie’s complaint, but we didn’t think the insurer’s actions impacted Suzie’s decision to use the ‘non-fault’ service. We also found Suzie’s distress was caused by the quality of the credit hire/repair service (which we couldn’t consider) and not the referral – so we didn’t award any compensation.