Keoghs Insight


Gary Herring

Gary Herring


T:01204 672386

COVID-19 – Impact on Credit Hire

Credit Hire Aware | July 2020

Whilst the spectre of the coronavirus outbreak has loomed over credit hire for most of 2020, particularly in terms of the impact on the parts supply chain from Asia and Europe, few could have fully appreciated – even as recently as early March - the profound impact on society generally that the pandemic would have.

As we continue to navigate through an unprecedented time, it is clear that there has been – and will continue to be – a significant impact on credit hire landscape as a result of the COVID‐19 outbreak and the resulting societal measures put in place to contain it. From the early days of lockdown, it was not difficult to predict that uplifts in average durations would be almost certain, as well as potentially rate inflation.

In response, as of 19 March 2020, Keoghs introduced a COVID-19 Live Hire Issues log within all cases being handled within our outsourced pre‐litigated credit hire unit (which processes some 40,000 cases a year), to ensure that any COVID‐19 issues which arise (or are alleged to have arisen) during live hires are monitored and analysed. As well as ensuring that the appropriate interventions can be made in the individual cases, this has also allowed us to identify and where necessary validate adverse behaviours and common patterns of conduct amongst CHO entities.

Our unique ‘end to end’ view of the market has enabled us to report regularly to our insurer clients on trends and behaviours during the outbreak, as well as to put in place clear strategies backed with the necessary evidence, which puts insurers in the best position possible to drive favourable settlements or positive litigation outcomes.

Since 19 March 2020 we have provided clients with regular COVID-19 Credit Hire Impact briefings, which have reported on the trends seen and the strategies deployed to counter them, as well as updating on the ongoing situation with the courts and various supply chains including the BHR and repair markets.

In addition, detailed strategic and technical guidance has been provided around a multitude of COVID-19 related issues, including:

  • The legal position where the period has been extended due to a number of COVID-19 related scenarios, the chain of causation, and how to mitigate the impact
  • The recoverability of the additional 72 hours hire claimed for ‘de-contamination’
  • The recoverability of an additional hire period where the CHO cannot collect the hire vehicle
  • Mitigation and ‘signposting’ – the purchasing of replacement vehicles in a lockdown environment
  • The lockdown, self-isolation and the impact on the need to hire
  • The approach to taxi hire claims incurred in a lockdown environment
  • The impact on pleadings in view of the CPR amendments
  • What is “essential travel” for the purposes of the government restrictions?
  • Challenges to BHRs obtained in a lockdown environment and how to respond

As we now gradually proceed out of the lockdown, attention will increasingly turn away from live hire mitigation measures, and towards ‘phase 2’ of the COVID-19 impact; that being the receipt of payment packs in COVID-19 affected claims and the impact of the crisis on invoice inflation. Insurers will now face difficult decisions as to what points to challenge and what cases to settle. On the one hand, there will certainly be scenarios where increased durations are unavoidable and recoverable; but on the other, insurers will be anxious not to allow CHOs and claimants to profiteer from the situation and to challenge such behaviour robustly where this occurs.

Our webinar on 28 May was held with the intention of assisting insurers to resolve some of these issues and to identify the scenarios in which legitimate and robust challenges can be made, and to set out the evidential and strategic approaches which can be utilised to maximise prospects. Please let us know if you would like to register your interest in receiving the link to our webinar or our previous and future Impact Briefings.

Finally, with a number of factors at play it remains to be seen what the long term impact of the crisis will be on the credit hire landscape. There is the distinct possibility that some CHOs may not survive, with consolidation of the market being a possible outcome. In addition, there is likely to be a shift in terms of vehicle mix and road usage for the foreseeable future which may itself have an impact on the market. We will continue to update and proactively assist our clients and strategic partners as the situation continues to unfold.