Credit Hire in the MoJ Portal
Personal Injury aware
Credit hire claims are difficult to track through the MoJ Portal – costing insurers significant amounts of money. Melanie Mooney highlights the issue and how Keoghs can assist.
With the MoJ Claims Portal handling over 700,000 motor claims in the last full reporting year, there is clearly a lot of scope for those firms that handle thousands of claims to make the portal work to their advantage. One key issue we have identified for a number of clients is where a claim for credit hire is attached to a personal injury claim.
The portal rules are not conducive to handling credit hire – vehicle related damage being excluded from the valuation of the claim – this means a very low value personal injury claim may proceed through the Portal, but with a high value credit hire claim attached. Many personal injury teams are not set up to properly deal with this and therefore indemnity spend is being impacted. As claimant firms and credit hire organisations have become wise to this, we have seen an increase in this type of claim.
Based on our understanding, many credit hire claims that are settled at either Stage 2 or Stage 3 are recovered at a level of between 97% and 100%, largely down to the lack of supporting evidence being provided at the appropriate time in the claim, as dictated by Mulholland v Hughes and then further reinforced by Willis v Phillips. When you compare this with savings outside the portal reaching an average of 50%, it is clear that insurers’ indemnity spend will increase exponentially unless there is a customised process in place for handling these claim.
By way of example, here are two cases showing the difference when we are instructed at Stage 2, compared to a common Stage 3 instruction (where we have little chance to influence).
The claimant presented a claim for general damages, recovery and storage valued at £2,602 and credit hire valued at £6,063. There were obvious need issues, as no evidence in respect of need had ever been provided and the claimant had ended hire with no payment ever being made in respect of their vehicle, which was written off.
At Stage 2, our client made a reduced offer for recovery and storage, but provided no justification in their comments. In respect of hire, they made a nil offer on the RTA6 form and referred the claimant to their credit hire team. There was a letter sent by our client questioning need but this was not uploaded to the Portal.
As per our instructions, the matter went to a Stage 3 hearing. As no evidence was uploaded at Stage 2 the claimant was awarded their claim in full, with the Judge stating that ‘this is a straightjacket process, I cannot accept anyarguments at Stage 3 not raised at Stage 2’. Our client had to pay the claimant’s claim in full, as well as £1,163 in Stage 3 costs and counsel fees.
We were instructed on submission of the claimant’s Stage 2 pack which claimed general damages, £311 of medical expenses, £2,613 of credit hire and £250 for recovery and £200 for storage. In our initial response we challenged the physiotherapy rates, providing examples of local suppliers offering treatment at reduced rates; challenged hire in its entirety based on the fact need was not addressed; and challenged the need for recovery and storage given the vehicle was stored at a salvage agents who ultimately purchased the salvage. We were specific about what further evidence was required and when the total consideration period was due to expire.
The claimant’s solicitors provided no further evidence until after the total consideration period expired. At this point they were put on notice that we would make an application to debar the same should they not consent to remove this, which they failed to do.
As such, the matter proceeded to a Stage 3 hearing where an application was made. This was successful, and therefore as the need to hire was unproven the credit hire claim was dismissed. Further to this, the Judge accepted our arguments in respect of storage, dismissing this in its entirety, and reduced the recovery to a more reasonable £180 + VAT. In respect of the physiotherapy, the Court also agreed the lowest reasonable rate should apply and awarded £110.
The defendant therefore beat their Part B offer and were awarded costs, interest and a refund of the overpayment made.
We saved our client over £3,000 against the special damages claimed, as well as recovering £642.25 in Stage 3 costs and the client did not have to pay the issue fee.