What is credit hire?
Credit hire is a replacement vehicle arrangement usually offered after a non-fault accident, where the hire charges are provided on credit and the credit hire company later seeks to recover those charges from the at-fault party’s insurer. It is not the same as a free courtesy car, and you should understand the agreement, eligibility checks, liability position and your possible responsibilities before signing.
Not everyone knows this though! A few think it’s a free car hire service, whilst others know a little, but wrongly believe it’s a service that’s only available to those with fully comprehensive insurance. Not only that, but there are also some people who miss out on credit hire as they incorrectly believe it will automatically increase their insurance premiums.
Credit hire often sits alongside wider car insurance claims, especially when a non-fault driver needs repairs, recovery or a replacement vehicle while liability is being handled.
Interesting fact: FCA sample data published in 2025 found that, across 10 firms in its review, customers introduced to credit hire companies fell from 268,879 in 2019 to 251,359 in 2023 [1].
Let’s look a little more closely at credit hire
Credit hire could allow you to access a replacement vehicle without paying upfront, depending on liability and eligibility, but charges still exist, although these are usually recovered later from the at-fault insurer where liability is accepted or established.
No up-front fees does not mean there are no fees. If liability is denied, fees are disputed, or the terms of the agreement are not met, you could become responsible for some or all charges.
The credit hire provider will usually seek to recover the hire charges from the at-fault party’s insurer, where liability is accepted or established and the charges are considered recoverable. Of course, every motor claim is different, and the success of the outcome will depend on the specific facts of your case.
Today, we’re going to separate the myths from reality and look at some of the misconceptions that surround credit hire. We’ll also look at how credit hire companies may become involved in your accident, plus what your responsibilities are when you sign up to a credit hire agreement. We’ll also highlight the questions you should be asking before you sign up to an agreement.
Here are the key takeaways to save you time
- Credit hire may help eligible non-fault drivers continue driving after an accident without paying hire charges upfront.
- Credit hire is different from standard vehicle rental because costs are usually recovered from the at-fault insurer where appropriate.
- Not every driver or every accident qualifies for credit hire.
- Drivers have responsibilities under a credit hire agreement and should understand these before signing.
- An accident management company can also offer other accident management services, such as repairs, vehicle recovery and claims support.
- Each claim will be judged on its own merits, so it will depend on how the accident occurred and what evidence you have.
- Knowing how credit hire works will allow you to make knowledgeable decisions when you're involved in an accident.
Why is credit hire often misunderstood?
Unfortunately, many people don’t understand the credit hire agreements, and there’s a reason why. It’s simply one of those things you don’t know about until you have an accident. Only then will you be dealing with insurers and the problems of no transport.
When making your car insurance claim, you may be working with numerous organisations and professionals such as vehicle repairers, an accident management company, solicitors, and engineers. Each of those providers is offering a different service, so you may be unsure about who is doing what.
Alongside that, the term ‘credit hire’ can sound confusing. It sounds like some sort of finance deal such as a loan, or financial credit of some kind. In simple terms, ‘credit hire’ means the cost of using a vehicle is deferred until the at-fault party’s insurer makes payment, if liability is found [2].
The myths and reality of credit hire
Myth 1: Credit hire is a free service.
Reality: It’s not free. You may not have to pay upfront, depending on liability and eligibility, but note that charges still exist and are usually recovered later from the at-fault insurer where liability is accepted or established. Always make sure you know what you’re signing up for and read the contract before signing.
Myth 2: You automatically qualify for credit hire.
Reality: You may not be eligible. It will depend on numerous factors, with the starting point being who was responsible for the accident.
Myth 3: Car hire and credit hire are the same.
Reality: Nope! With standard car hire you pay upfront for the service. With credit hire, it’s generally deferred and sought from the insurer of the driver who caused the accident, where liability is accepted or established.
Myth 4: You need comprehensive insurance to get credit hire.
Reality: No, every case is assessed on its merits. A primary issue will be the consideration of whether reasonable losses are recoverable from the at-fault driver’s insurance.
Myth 5: You don’t need to read the credit hire agreement.
Reality: Ensure that you read and understand the contents, particularly your rights and obligations, under the credit hire agreement.
Myth 6: Credit hire will increase your premiums.
Reality: There is no universal rule that a credit hire agreement itself will increase your premium. Insurers may still consider the accident, claim history and their own underwriting rules when pricing future cover.
Questions drivers should ask to protect their interests
- What are my responsibilities under the credit hire agreement?
- How long is the expected hire period?
- What happens if repairs take longer than anticipated?
- Who should I contact if my circumstances change?
- How will I receive updates on my claim?
Understanding Your Responsibilities
Carefully read the credit agreement: You must make sure you understand your obligations under the agreement.
Provide Accurate Information: It is your responsibility to provide truthful and accurate information to the accident management company. If you fail to do so, it could create delays.
Cooperate With the Claims Process: Make sure you provide any requested documents quickly.
What to do before accepting a credit hire vehicle
If you’re offered a credit hire vehicle, take a few simple precautions before accepting it to understand what you are signing up for and the potential consequences if the claim is later disputed.
- Ask if you are signing a credit hire agreement. Ensure you’re clear that the replacement vehicle is being supplied on a credit hire basis.
- Ask who will be liable for the hire charges. Ask what will happen if the insurer or another party refuse to pay the hire charges, especially if recovery efforts fail.
- Ask what happens if liability is disputed. Clarify what effect a dispute over who was at fault for the accident will have on the vehicle hire arrangements. You should also ask if you will become liable for any costs.
- Clarify the expected length of hire. Ask for how long you will need the vehicle and what will happen if your repairs are delayed.
- Keep copies of all your evidence and correspondence. Save any evidence of the accident and repair updates, vehicle recovery records, hire documents and correspondence with insurers, repairers and other parties.
- Clarify usage of the vehicle. Check that you’re allowed to use the vehicle for business purposes, or have additional drivers, before using the replacement vehicle.
- Seek advice if you’re unsure. If you’re unsure about anything within the agreement, or your potential liability, seek advice before accepting the vehicle or signing anything which could impact your claim.
Claimsline can help you understand your practical options following an accident. Where appropriate and eligible, this can include arranging vehicle recovery, repairs and a replacement vehicle through working partners such as a recovery company, repairer or hire company. Where liability is accepted or established, the hire company or repairer seeks the charges from the at-fault insurer. You may still need to notify your own insurer, depending on your policy terms. The support you’re entitled to will vary based on the specifics of the accident, available evidence, liability, policy wording and eligibility. Claimsline is authorised and regulated by the Financial Conduct Authority in respect of regulated claims management activities (FRN 831196).
FAQs
Can members of my family drive the hire vehicle?
Only authorised drivers can drive the vehicle. Only authorised drivers named in the hire agreement are usually permitted to drive the vehicle. Allowing unauthorised drivers could invalidate the insurance.
Can I use a credit hire vehicle for business?
Probably yes if your lease agreement and insurance allow for business use. You should definitely check before taking the car for business use. Operating illegally can cause problems with either insurance or your agreement.
What type of vehicle will I receive?
You may be eligible to receive a vehicle with similar specifications to your own vehicle, where applicable.
How quickly can I get a replacement vehicle?
Occasionally a replacement vehicle may be secured immediately. However, timing is dependent on eligibility verification, liability documentation, geographical location and type of vehicle requested/determined necessary and availability. Same day or next day delivery should not always be expected.
Can I choose a luxury upgrade vehicle?
Typically, the replacement car must be reasonable for your purposes and reasonably comparable to your vehicle, where appropriate. You likely can't recover the difference if you upgraded to luxury from the other side's insurer and you could become responsible for additional charges. Read the contract before accepting it.
How many credit hire cars are supplied to customers annually?
In the FCA’s sample of 10 firms, successful referrals where the credit hire firm supplied a hire car fell from 190,260 in 2019 to 166,389 in 2023. That is a sample figure, not a confirmed whole-market total [3].
Final Word
Remember, there are myths and the reality surrounding car accident claims, management services and credit hire. Awareness of your rights and responsibilities prior to signing a credit hire agreement can help you choose wisely and avoid unnecessary charges in the future.
You’re now better placed to ask informed questions and can make better decisions regarding a credit hire agreement, no matter if you’re dealing with a car accident claim or simply considering an offer by an accident management company.
Where credit hire is available for your accident claim, read the agreement thoroughly, be aware of what you could be liable to repay and ask for clarification on anything you do not understand before signing.
Sources
- FCA sample data published in 2025 found that, across 10 firms in its review, customers introduced to credit hire companies fell from 268,879 in 2019 to 251,359 in 2023 - www.fca.org.uk/publication/multi-firm-reviews/motor-insurance-claims-analysis-multi-firm-review-2025.pdf
- In simple terms, ‘credit hire’ means the cost of using a vehicle is deferred until the at-fault party’s insurer makes payment, if liability is found - https://www.financial-ombudsman.org.uk/businesses/resolving-complaint/complaints-deal/insurance/motor-insurance/credit-hire-credit-repair-non-fault-claims
- In the FCA’s sample of 10 firms, successful referrals where the credit hire firm supplied a hire car fell from 190,260 in 2019 to 166,389 in 2023. That is a sample figure, not a confirmed whole-market total - www.fca.org.uk/publication/multi-firm-reviews/motor-insurance-claims-analysis-multi-firm-review-2025.pdf
