Hire charges

Any person whose vehicle is damaged by an accident is these days normally insured against the costs of hiring a replacement vehicle. Those costs may be covered by his policy, or they may be covered by independent arrangements made by the assured with a credit hire company after the accident has occurred. The usual arrangement is that the assured does not himself pay the charges, and that the relevant insurer will seek to recover them by way of damages from the defendant responsible for the accident. The recoverability of such damages was confirmed by the House of Lords in Dimond v Lovell [2002] 1 AC 384, which also laid down that the assured is under a duty to mitigate his loss by only hiring a car when it is necessary to do so and by paying no more than the local ‘spot rate’ for an appropriate replacement vehicle. In Bee v Jenson [2006] EWHC 2534 (Comm) Cresswell J has, by awarding replacement vehicle costs by way of damages, upheld the validity of arrangements entered into by a motor insurer with a credit hire company under which the assured was given no option but to accept a replacement vehicle provided by that company.