Insurer refers customer to credit hire when it wasn’t suitable

Motor Insurance

Paul complains his insurer referred him to a credit hire service when it wasn’t appropriate to.

What happened

Paul was hit on the side of his car while driving straight through a junction. He called his insurer to claim. They dealt with his repairs under his policy, but referred him to a credit hire company for a hire car.

The third-party insurer disputed liability. They said Paul was at fault as he drove through a red light, and they had CCTV evidence to show this. Paul’s insurer and credit hire company accepted the third-party’s account. They told Paul he had to pay for the credit/hire repair costs, as he failed to tell them about running the red light.

Paul disagreed and asked us to look into things further.

What we said

We told Paul we couldn’t look into the hire company’s actions, as the service was provided under an unregulated hire agreement. But we could consider whether he had insurance cover for the credit/hire costs, and whether it was suitable for his insurer to refer him to a credit hire service.

Paul had a separate policy that covers credit/hire costs. It provides cover when liability is disputed, but only if the policyholder isn’t held to be predominantly at fault for the accident. As Paul was at fault, he couldn’t claim on this policy.

We looked at whether Paul’s insurer should have referred him to a hire car service. During the initial call, Paul told his insurer “The traffic light went yellow, and I think I might have just made it through”. We thought Paul’s statement should have made it clear to the insurer there was a chance liability would be successfully disputed. We didn’t think Paul should have been referred to a credit hire service given the risk of Paul becoming liable for any disputed credit costs.

We asked Paul’s insurer to cover the hire costs as we did not think he would have been liable for them if the insurer had not incorrectly referred him to the AMC. We also asked them to pay Paul £300 for distress and inconvenience.