Car insurance news
02/12/2008
Cheapest deals hit by credit hire arrangements
When searching for the cheapest car insurance deals, there is a noticeable and growing trend caused by credit hire arrangements that is forcing up the cost of quotes and premiums.
It is estimated that motorists purchasing cover for their cars must fork out an extra £20 per policy to meet the costs associated with firms who lend vehicles to drivers when their cars are damaged in crashes.
Credit hire companies charge back the cost of hiring a replacement car to the insurer of an at fault driver - innocent motorists involved with a crash do not have to pay.
Rates are set between insurers and credit hire firms so there can be no over-charging. Claims that the bills presented by credit hire firms are sometimes contested - insurance firms have claimed they are not reasonable.
In a case highlighted on the BBC website, one woman used a replacement car for more than three months clocking up a £16,000 hire bill.
Amazingly, the car she hired was worth only £4000. The massive final bill resulted from repairs taking a long time to be carried out and was based on a £200 a day hire charge.
With the bill at such a high level, the insurer refused to pay and the innocent motorist - who was not at fault - was summonsed to court. In the end, the case was settled out of court.
The BBC article pointed out that such charging was leading to insurance for car drivers costing about £20 more for every £400 of cover premium.
It is this type of accident management system that is impacting the cost of finding the cheapest car insurance.
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