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OFT backs hire rates deal

Bodyshops have welcomed Government support for a controversial deal that will fix hire rates for vehicle rentals in non-fault situations.

The Office of Fair Trading has backed an agreement between insurers and non-fault courtesy car providers which will see both parties agreeing rates for the use of courtesy cars. But repairers are calling for an independent assessor to determine suitable replacement vehicle hire rates, rather than the current sub-committee of credit hire companies and insurers.

“By setting rates for credit hire through an independent assessor, it removes the price fixing element from the current arrangements that had been included within the existing terms of agreement published by the Association of British Insurers,” says Shaun O'Reilly, of the Body Repair Industry Campaign.

Until now, credit hire organisations who offer vehicles to innocent parties involved in accidents and subsequently claim the cost of hire back from the 'at-fault' driver's insurer, have been able to charge higher rates for courtesy car rental compared to a normal hire, and have even offered like-for-like cars.

This led to the groundbreaking decision in the Dimond versus Lovell case in 1999 which saw the insurance companies score a notable victory when the courts decided they were not liable to pay the higher rates of the credit hire agreement and only had to pay the market rate for vehicle hire.

The Association of British Insurers has now stepped in to avoid the threat of insurance firms flooding the courts with thousands of similar cases. It has made changes to its general terms of agreement, so insurers and credit hire companies will now have to agree courtesy car hire rates.

“In future, the repair industry will be able to offer credit hire as a legitimate product, providing a quality service to consumers.

“It should also help drive out improper practices in the industry. This will be of great service to all body repairers and their customers,” says O'Reilly.

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