Is your ‘courtesy car’ all it seems?

Covered mag, presented by
  • | by Kristian Dando

If your car is damaged by somebody else in a prang, you may very well be offered a replacement whilst it’s getting repaired.

“Innocent enough”, you might think, but some very shady practices conducted by criminal gangs, dodgy claims managements companies - and in some cases, complicit drivers - are adding £50 to the cost of British drivers' annual car insurance policies as part of the problem of wider insurance fraud, according to the Association of British Insurers.

Credit hire, in which the cost of a hire car is underwritten by a credit agreement and then claimed back from an insurer, has become rich pickings for the unscrupulous, even if most companies involved in the field operate within the boundaries of the law. They’re often linked to claims management companies, and it’s arguable that even the legitimate firms are problematic – their rates for cars are frequently much more expensive than from standard ‘high street’ rental firms. Fraudulent claims, replacement cars which don’t exist, and claims for top-of-the-range supercars when a bog standard one turns up are all said to be tactics employed by scammers, for up to £40,000 per car.

In some cases, fraudsters are said to encourage gullible drivers into participating actively in with the fraud, with the promise of cash payments and the chance to drive around in a shiny new car for a while. When neither the money nor the car turns up, physical intimidation is common, as well as warnings that going to the police will get the driver in to hot water, thanks to their involvement in criminal activity.

Garages are in on the act, too, as’s head of motor, Scott Kelly, explains. “The garage who is repairing a car will receive a commission from the hire company for referring that customer over, and in most circumstances, this commission is directly linked to the hire costs, so the longer the repair takes or the bigger the hire car, the more money the garage makes,” he says. “It makes sense for them to take as long as possible fixing your vehicle - next time you think to yourself, “why are the garage taking so long to make a simple repair of my vehicle”, look no further than the hire car you have on your drive and the inflated profits it delivers to your garage or mechanic in the process.”

The insurance industry is said to be investing around £200 million a year in tackling the problem of general insurance fraud, of which credit hire scams are part of. The IFB has access to over 130 million insurance records, and their counter-fraud software detects fraudulent activity by identifying suspect patterns and relationships between claims, policies and individuals. “The industry is closing in on organised insurance fraud groups, working with police forces up and down the country to secure convictions,” says Phil Bird, director at tge Insurance Fraud Bureau.

Since launching in 2006, IFB investigations have overseen 621 arrests, securing 162 convictions with a combined total of 155 years in prison sentences. But insurers need the help of drivers, too. Nick Starling, director of general insurance at the Association of British Insurers advised: ”If they (drivers) are involved in an accident, they should notify their insurer as soon as possible when the details of the accident are fresh in their mind. The more details they can provide, the better the insurer can investigate the claim.”

He also urged drivers to make sure that they know the ins and outs of whatever replacement car they’re given. “If they are approached about the provision of a hire car, they should be clear as to who is liable for the cost,” he said. “They should talk to their insurer who will advise them on their options and prevent them being caught up in a credit hire agreement that could leave them vulnerable to being liable for the full cost.”

“Ask yourself, ‘why are the repairs on my car taking so long?’” says the Insurance Fraud Bureau’s Phil Bird. “‘Why am I being offered a replacement car that is superior to the one I normally drive?’ If you have any doubts, contact your insurer direct, who will be happy to advise you.”

Report fraud If you know of anyone involved in motor insurance fraud, call the IFB’s free and confidential Cheatline on 0800 422 0421, or report it online.