CREDIT HIRE AND LOSS OF USE
Previously, UK tort law regarding liability for losses in the context of hire car agreements following a road accident had been interpreted to exclude certain contractual liabilities between a claimant and a hire company from being recovered from the at-fault driver’s insurer. This approach was based on the principle that contractual liabilities were not recoverable as damages in tort unless they represented a reasonable pre-estimate of the actual loss[5].
For example, if a claimant’s contract with a hire company stipulated a daily rate for loss of use of the vehicle, this contractual liability might not be recoverable from the at-fault driver’s insurer if it was not a reasonable pre-estimate of the actual loss. This interpretation meant that the at-fault driver’s insurer was not liable for losses that were not directly caused by the at-fault driver’s actions, but rather stemmed from the contractual relationship between the claimant and the hire company[1][2][5].
However, the Supreme Court’s decision in Armstead v Royal & Sun Alliance Insurance* overturned this interpretation, establishing that the at-fault driver’s insurer is responsible for compensating the loss of use as per the pre-agreed terms between the claimant and the hire company[2][3]. This ruling signifies a departure from the previous notion that certain contractual liabilities between a claimant and a hire company could not be recovered from the at-fault driver’s insurer[1][2][5].
Citations:
[1] Revised ECT
[2] Supreme Court.
[4] Willmalcomson.
[5] Armstead
