Car dealers have been warned to consider a recent court case if they are planning to hire vehicles to replace those taken off the road by a no-fault crash.
Typically dealers with an employee involved in a crash that is not his fault, are entitled to a replacement vehicle on credit hire while their vehicle is replaced.
However, the Court of Appeal has ruled that dealers with access to any spare vehicles – such as those on the forecourt – must not take advantage of credit hire. If they do, they may not be entitled to recover those costs.
“The Court of Appeal decision casts significant doubt over a company’s ability to recover hire charges following a non-fault accident,” explained Denny Payton partner at the law firm HarveyIngram.
“The decision could have far reaching consequences.”
The thrust of the 17-page judgement between car dealer Beechwood Birmingham and Hoyer Group is that the dealer should mitigate its loss following an accident by ensuring any spare vehicles are used before incurring hire charges.
“This case could have a significant impact on the fleet rental market as insurers now have a clear argument in situations where they can prove that a company had spare capacity,” said Payton.
Dealers and manufacturers should note that the case only relates to their own employees who are involved in no-fault crashes and not their customers, who may still be entitled to credit hire vehicles.
Beechwood had claimed £30,000 in credit hire charges despite having a large stock of cars.
The damaged vehicle, an Audi A6 Quattro, was being driven by a manager when it was involved in a collision.
The court ruled that a replacement vehicle could have been sourced from an available pool of 64 cars and therefore there was no need to hire a separate vehicle.
Following the accident, the dealer hired another A6 for 120 days at a cost of £30,239.00. The repairs to his crashed vehicle amounted to just over £3,000.