Evidence offered for inflated costs after insurance claims

An online insurer has revealed fresh evidence that following an accident insurance claims costs are artificially boosted. The inflated costs, which can amount to up to £200 million per year, are the fault of credit hire firms. These firms purchase details of owners from garages and often insurance companies, and offer repairs and hire cars to the driver after an accident.

A large proportion of these credit hire agencies overcharge for their work. The bills which they submit are ‘extravagantly inflated’, often by 100% above regular market rate. These findings are backed by Honest John’s postbag and Telegraph Motoring, whose readers suffered additional costs following an accident, mainly by replacement cars which were charged at daily rental rates.

During Swiftcover’s investigation they found that many credit firms overcharge for a variety of services. These include bills sent for cars that are being stored at no cost in a residential area and replacement vehicles which have been charged at as much as double the market rate.

The OFT have estimated that car hire and repair charges which are artificially high significantly add to the premiums for drivers, saying that some insurers are working with suppliers of courtesy cars and with garages by allowing them to charge inflated prices.

When an insurance claim is initially made, the company which insures the driver who is at fault must pay for any costs for the other driver, including car hire and repairs. The OFT has discovered that the costs can be inflated by the opposing company, often they receive a fee from the garage or car hire firm involved for allowing this.

Swiftcover have claimed that its own in-house teams reject about £120,000 of inflated credit hire claims per week, which would amount to £200 million per year in the UK alone.

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