So-called ‘credit hire’ firms may be the reason the UK is plagued with rising car insurance rates, as these companies will pay car insurance companies £300 or so for the personal details of third-party motorists involved in traffic collisions.
It’s not only motor car insurance companies that are handing out personal information. Brokers and breakdown firms have also been known to collect a few extra quid from selling on the information to these firms, who then go on to inform the motorist while their own car is undergoing repairs and a replacement vehicle will be arranged for them, with the insurer of the ‘at fault’ motorist to pick up the bill.
However, insurers are getting the short end of the stick on this deal. Reports made to the Office of Fair Trading say that an insurer would only spend anywhere from £400 to £500 for a replacement vehicle, yet these credit hire firms will charge anywhere from £1,200 to as much as £1,500 for the identical service.
60 per cent of third-party claims included the use of a credit hire firm to supply a replacement vehicle. This has grown rapidly from 2005’s approximately 20 to 25 per cent figure, and the costs may be inundating insurers, leaving them no choice but to raise their rates and make discount car insurance in the UK that much harder to find – especially with around 800,000 claims for credit hire car reimbursement submitted on a yearly basis.
Insurers in this case are their worst enemies in this case, with one firm accepting a £300 payment but then being slammed with a £1,500 car hire claim from another source, which has led many insurance experts to call for a ban on selling personal details of Brits involved in accidents.