WHAT TO DO IF YOU RECEIVE A DEMAND FROM A “NOT AT FAULT” RECOVERY AGENT
In the recent article regarding car crash debt recovery scams by “not at fault” recovery agents, it is suggested to discuss the actions that can be taken if an individual receives a demand from one of these recovery agents, credit hire companies, or smash repairers.
How Does it Work?
The workings of credit hire companies have become the focus of an increasing number of litigated matters, according to recent observations. Credit hire companies function as car rental businesses that provide replacement vehicles exclusively to customers who have been involved in a motor vehicle accident.
In some cases, these companies have ties to the panel repairer responsible for repairing the primary vehicle. Taking advantage of the fact that the at-fault party is insured, they often demand high amounts for repair costs, assessment, towing, recovery fees, and replacement vehicle costs.
These practices have raised significant concerns among the settlements departments of major insurers, underwriters, and third-party administrators. It is not uncommon for credit hire companies to demand more than $5,000 for a replacement vehicle, even when the cost of repairing the primary vehicle is significantly lower.
Adding to the issue is the fact that these companies are typically represented by aggressive, commission-driven, and ethically questionable law firms that may initiate court proceedings within weeks of a collision, leading to even higher costs for the claim.
How Do I Deal with It?
Based on their experience dealing with credit hire companies, recovery-based repairers and their solicitors, the following tips have been compiled by an unknown source to help reduce the costs of these claims:
It is important not to ignore any demand, as quick responses are crucial. It is advisable to ensure that all communications are recorded and that the other party receives the response. It is also recommended to seek the full proof of loss, including any materials that support the demand for any loss of use component at this stage, even if liability is still being disputed.
The proof of loss should contain the following information:
– The other party’s version and diagram;
– Assessment report or repair quote;
– Any photographs in their possession;
– Invoices for repair, tow, and salvage.
Loss of use:
- Three months’ worth of running sheets (if an income-generating asset);
- Hire contract with daily rates and number of days hired.
Upon receiving the proof of loss documents and assuming liability is admitted, it is recommended to immediately assess those materials with the assistance of a qualified assessor from the same jurisdiction.
If there are any concerns regarding the inflated cost of repairs, it is advisable to engage an expert motor vehicle assessor to conduct a fair and reasonable assessment on the demands. The designated assessor should hold appropriate qualifications and ideally be located in the same jurisdiction where the collision occurred.
Additionally, their assessment report should include a statement indicating that they understand and accept the expert witness code of conduct.
A recommendation is made to promptly respond to all correspondence in writing. The response should include a clear statement of the entity’s stance on liability and quantum. Additionally, it should include an unambiguous request to the prospective plaintiff to refrain from initiating legal action, in the event that settlement negotiations may be appropriate.
In situations where the other party is legally represented, a reminder should be provided that they have a responsibility to attempt settlement negotiations prior to initiating legal action.
In situations where there is an undisputed portion of a claim, it is recommended to send a cheque for that amount promptly, even if the other party has not requested it. The payment should not be declared as full and final settlement as this could result in the claimant rejecting it without consequences.
Such an action may lessen or eliminate the plaintiff’s entitlement to costs and interest if they initiate legal proceedings, and it could also create an opportunity to file a complete defense. Additionally, it may reduce the size of the plaintiff’s claim, making legal proceedings of no value.
It is essential to note that if a third party is uninsured, they are not usually required to write off their vehicles under statutory law, even if the cost of repairs exceeds its net worth.
Before legal proceedings are initiated, no additional legal fees, administrative fees, recovery fees, or excess-reduction fees should be paid unless there are exceptional circumstances that justify their inclusion. Generally, towing fees and assessing fees are not disputable unless they are unreasonable or excessive.
If legal action has commenced, any documents received should be promptly submitted to the lawyer, as ongoing discussions will not delay the plaintiff’s right to seek Default Judgement.
Credit Hire Replacement Cars
When disputing the cost of replacement vehicles, the process can become complicated. In many cases, the cost of a replacement car exceeds the damages on the initial vehicle, leading to higher costs for a longer period than the repair time should have taken. Additionally, the daily rate for the replacement car may be higher than the cost of other available vehicles.
Most demands for replacement vehicle costs come from credit hire agreements. In these agreements, the claimant has not paid the hire company for the replacement car. Instead, the credit hire provider has the right to seek recovery on the claimant’s behalf from the defendant.
To successfully seek these costs, the claimant typically only needs to demonstrate a genuine need for the replacement vehicle for the entire claim period and show that the daily rate is reasonable.
In order to assess the validity of a demand prior to payment, there are several questions that can be asked. These questions include whether or not the vehicle that is material to the claim was actually repaired, whether a replacement vehicle was necessary for the entire period of hire, when damages were paid for the vehicle in question and why those funds were not used to secure a permanent replacement, and any delays that occurred during the repair process and why they happened.
It is important to have an assessor check the answers to these questions. Additionally, it may be relevant to consider whether the vehicle should have been written off instead of repaired, when the vehicle was deemed written off, and what steps were taken to permanently replace the vehicle.
Other relevant questions may include whether a free loan car was available from the repairer, whether the plaintiff investigated other vehicle rental options at a more competitive rate, what make and model of vehicle was rented compared to the one being replaced, and what additional items were added to the daily hire rate that would not have been necessary.
Finally, if the demand is being made by a vehicle hire provider, it is worth considering whether the company has a vehicle available for the claimant’s use while their own vehicle is being repaired. It should be noted that the claimant is not required to accept this offer, but the court may take note of it.
It is important to note that the credit hire agreement provides the hire company with subrogated rights to pursue recovery, but this does not exempt the hirer from personal responsibility for the hire costs.
If the Court does not grant the full amount sought from the Defendant, the credit hire company may seek the outstanding amount from the hirer directly, which may not have been explicitly stated in the credit hire contract.
It is advisable to consult a lawyer for legal advice regarding any litigated demands for vehicle hire costs and to provide them with all relevant documents as soon as possible.
Do you want to learn more about how Debt Recoveries Australia can assist you with your invoicing and debt collection issues? Please contact us at firstname.lastname@example.org or 1300 799 511. You can also contact us via Skype at debtrecoveries.