Whilst it is to be applauded that the majority of the industry on both sides have undoubtedly worked hard to establish and maintain a co-operative approach through the Covid crisis, amongst the minority there is no doubt that the last nine months have starkly amplified some of the kind of behaviours that embody the very worst excesses of the credit hire industry.
It should go without saying that credit hire is, at its core, a beneficial service which fulfils an essential function in keeping innocent victims of road traffic accidents mobile. That is ever more so against the backdrop of the Covid crisis, particularly in the early stages, where the need for mobility on the part of accident victims – and the population generally – will have been greater than ever. As we have cautioned from the outset, defendant insurers would be advised to exercise caution in terms of any temptation to judge the test of ‘need’ based solely on a tally of the number of miles that may have been travelled during a hire period. After all, ‘use’ and ‘need’ are often two entirely different things.
It should be equally as obvious, though, that the provision of a credit hire vehicle should always be predicated on a proper assessment that there is a genuine need to hire it. That is also likely to be ever more important against the backdrop of Covid, during which it is obvious that there will often be instances where that need will no longer exist – perhaps in relation to multi-vehicle households where both occupants work from home and household mobility does not depend on the accident damaged vehicle being replaced, or for some commercial vehicles or taxis, for example.
It is in these instances that, for what might well be understandable business reasons, a proper assessment of need appears in some quarters to have been replaced with generic claims of an ‘entitlement’ to a replacement vehicle come what may, apparently entirely irrespective of any actual need.
There is no greater illustration of this than the approach of certain organisations to the provision of high-end prestige vehicles during the Covid crisis. It should be said that many operators appear to have reassessed the need for a particular class of vehicle in light of the lockdown restrictions and ‘downgraded’ high-value vehicles to lesser models where warranted; they should be applauded for doing so. However, a considerable number of claims have been seen, emanating from certain organisations in particular, where claims have been presented for prestige vehicle hires at eye-watering daily rates – over £1,700 per day in some instances – incurred even within the midst of the most stringent restrictions of ‘lockdown 1’.
The instances of this occurring are far too many to be mere one-offs, or specific to the particular circumstances of an individual claimant. The claims have arisen in circumstances where the vehicle is one of a number of vehicles within a household, and almost always where the individual is working from home and barely, if ever, using the vehicle at all. There has usually been no evidence at all of any specific enquiry on the part of the CHO as to the need for a certain type of vehicle, or whether a lesser vehicle would be sufficient to meet any need for mobility, in circumstances where any business use is eliminated entirely and only essential journeys could be made. It is surely inconceivable that any reasonable person spending their own money would chose to pay daily rates for a vehicle at multiples of most monthly mortgage payments, solely for that vehicle to sit on the drive or be taken to the supermarket once a week.
The only conclusion that can really be drawn, therefore, is that for some organisations, the provision of expensive like for like vehicles throughout the lockdown was maintained not based on need, but as a matter of policy. Or, in other words, for profit. Inevitably, now that the claims are being received and challenge is being made, there is usually very little specific evidence of a claimant’s particular needs or circumstances being seen from these operators, but rather arguments that the provision of a like for like vehicle was the claimant’s ‘entitlement’.
So is a claimant really ‘entitled’ to a like for like vehicle, regardless of how much it cost and irrespective of whether a much less expensive vehicle would have perfectly adequately met the need for mobility?
The starting point is that the claimant is entitled to restitutio in integrum – that is, to be restored to the same position as before the accident occurred. CHOs will habitually rely on this as meaning the claimant is ‘entitled’ to a like for like replacement. But that first principle is always subject to the duty to mitigate loss. Or. as it was put in British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways Co.  UKHL 617:
“… but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.”
In a credit hire context, the Court of Appeal in Clark v Ardington  EWCA Civ 510 said this regarding the type of vehicle the claimant was allowed to recover damages for:
“A person who has no need for a replacement car because, for instance, he is abroad during the repair cannot recover the cost of hiring a replacement which he never incurs (see Giles v Thompson at 167D). Similarly, a person who does not incur the cost of hiring a sports car cannot recover more than the cost actually incurred. Mr Dennard expressed his satisfaction with the Vectra and upon the facts it would not have been reasonable for him to insist upon a replacement sports car. However if a need for a particular replacement car is established, then the cost incurred of hiring that car is recoverable.”
Further, an often overlooked part of the judgment in Pattni v First Leicester Buses  EWCA Civ 1384 (“Bent 2”) sheds some more light on the position:
“(3) The injured party cannot claim reimbursement for expenditure that is unreasonable. If the defendant can show that the cost that was incurred was more than was reasonable, either by proving that the claimant had no use for a replacement car in part or at all, or because the car hired was bigger or better than was reasonable in the circumstances, the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent to the damaged car. As Lord Mustill put it in Giles v Thompson, “…The need for a replacement car is not self-proving”.
These short passages succinctly demonstrate, if it were needed, that the provision of a like for like vehicle cannot possibly be some absolute and inalienable entitlement. At best, the need for a highly prestigious like for like vehicle is something which a claimant must establish, or at worst, it is in any event clearly open for the defendant to be able to show that the car hired was bigger or better than was reasonable in the circumstances.
There is a further (albeit not binding) decision which may assist defendants when considering expensive prestige hire against the backdrop of the lockdown. In Morrell v Covea, HHJ Plumstead considered a claim for hire of a Bentley in the circumstances where the claimant’s evidence was that the actual use during the hire period was merely as “the family runabout”. Having been referred to the relevant authorities, and having considered the claimant’s submissions around restitutio in integrum, HHJ Plumstead said:
“So, I am satisfied that in this rather unusual case, although they had a Bentley, they were not putting the Bentley to Bentley uses. They were putting the Bentley to the uses which a perfectly adequate, but relatively top range, family saloon would have been perfectly adequate.”
When the dust settles on Covid, it may well be the case that there is a period of reflection during which the way entities conducted themselves during the crisis comes into objective focus and shapes perception – and relations – in the market going forwards. Just as in the case of an insurer who attempts to argue complete lack of need for reasons of self-isolation alone, CHOs who seek to ‘push the envelope’ and attempt to recover extreme sums for high-end vehicles provided to individuals without thought for need or use, especially where those individuals are oblivious to their liability to pay, are in our view unlikely to be judged favourably either – whether at trial or in the court of industry opinion.
The service you deliver is integral to the success of your business. With the right technology, we can help you to heighten your customer experience, improve underwriting performance, and streamline processes.