Courtesy car costs to be capped

[Michael Browne]

Insurance premiums may be cut by plan to cap cost of courtesy cars

 

Regulator wants to stop insurers from inflating repair and hire costs, which are passed on to at-fault driver after an accident

 

Motorists could see their insurance premiums fall following proposals by the competition watchdog to cap the over-inflated prices insurers charge for courtesy cars.

 

The Competition and Markets Authority (CMA), which superseded the Competition Commission earlier this year, wants to end the widespread practice that sees the insurer of an innocent driver inflate the costs of car repair and car hire that are then passed on the insurer of the at-fault driver, following a road accident.

 

The practice can add as much as £1,000 on to the cost of a replacement car compared with the price an insurer would have paid if they had taken liability for the cost of the car hire themselves. This extra cost is ultimately passed on to all motorists, not just the at-fault drivers, in their insurance premiums.

 

 

http://www.theguardian.com/money/2014/jun/12/insurance-premiums-cap-cost-courtesy-cars

 

 

 

The measures include:

 

• a cap on the charges passed to the insurer of an at-fault driver in an accident for the cost of providing a replacement vehicle to the non-fault driver, to more closely reflect the costs incurred and remove significant inefficiencies
  
• better information for consumers about their rights following an accident
  
• a ban on price parity agreements between price comparison websites (PCWs) and insurers which stop insurers from making their products available to consumers elsewhere more cheaply
  
• better information for consumers on the costs and benefits of no-claims bonus protection
  
• a recommendation that the Financial Conduct Authority (FCA) looks at how insurers inform consumers about other PMI-related add-on products
  

 

 

https://www.gov.uk/government/news/cma-sets-out-changes-for-private-motor-insurance

[dacouc]

They're referring to replacement cars eg credit hire cars, courtesy cars are provided by the customers own insurer, credit hire cars are at the cost of the fault third party

[MaxxPower]

I doubt we'll see premiums fall. What we will see is insurance companies pocketing the difference.

[2Grumpy]

I doubt we'll see premiums fall. What we will see is insurance companies pocketing the difference.

 

or the cost of insurance fall as a result of savings stopping this practice, balanced by an increase due to the fall in income from no longer being able to overcharge other companies in the same way.

 

it's one big roundabout (but not the sort where fraudsters intentionally brake, causing you to run into the back of them so that they can make an insurance claim)

[SuperVillain]

The practice can add as much as £1,000 on to the cost of a replacement car compared with the price an insurer would have paid if they had taken liability for the cost of the car hire themselves.

 

I wonder where the Guardian got the £1,000.00 figure from... I reckon it's probably treble that on the average credit hire claim...

[Wee Jock McPlop]

I had a claims management company acting on my behalf a few years back after an accident which the other party was to blame - my insurer (elephant) do not handle these kinds of claims themselves. When I got a copy of the invoices after it was settled they had charged the other party's insurer (Direct Line) £185 per day for my hire car, an Alfa Romeo 156. For perspective that's more than what Avis would charge for an E Class Merc or double what they charge for a Passat which is reasonably comparable. The whole claim including courtesy car was more than my car's value.

[dacouc]

I had a claims management company acting on my behalf a few years back after an accident which the other party was to blame - my insurer (elephant) do not handle these kinds of claims themselves. When I got a copy of the invoices after it was settled they had charged the other party's insurer (Direct Line) £185 per day for my hire car, an Alfa Romeo 156. For perspective that's more than what Avis would charge for an E Class Merc or double what they charge for a Passat which is reasonably comparable. The whole claim including courtesy car was more than my car's value.

 

The claims management company paid Elephant about £500 commission for passing you over