Insurers should expect more expensive and frequent ‘vehicle damage’ claims that cover the cost of a vehicle’s repair, storage and recovery and its ‘diminished’ value following an accident, according to the head of credit hire at DAC Beachcroft.
Speaking at the law firm’s annual credit hire conference, which this year celebrated its 10th anniversary, DAC Beachcroft’s head of credit hire, Emma Fuller, said: “Over the last year, we have seen a 30% increase in both volumes and values of damage claims linked to credit hire.”
“Historically, a ‘diminution in value’ claim for the difference in the vehicle’s value, pre and post-accident, may have hovered at around 3-4% of the vehicle’s pre-accident value,” she explained, “but in the last 12 months we’ve seen claimants alleging their vehicle has dropped in value by 10-15% as a result of the accident. The net result is that the amount being claimed for diminution has risen by around £500 per claim, making the average diminution claim worth £2,250.”
“We predict that damage claims will increase in the future, given that the reforms being introduced by the Civil Liability Bill currently only cover personal injury, with credit hire and vehicle damage claims not included. As a result, we’re expecting more claims management companies to move into this area.”
Reflecting on how the credit hire and damage market has changed over the past 10 years, she noted that DAC Beachcroft’s 90-strong credit hire team now handles double the number of credit hire claims and has saved insurer clients more than £100 million over the 10-year period.
Helen Bates, DAC Beachcroft’s head of credit hire fraud, noted that there has also been a huge increase in the volume and value of fraudulent credit hire claims.
“The average amount claimed in a credit hire fraud case is now £26,000, compared with £4,000 in the motor personal injury fraud arena,” she said. “As 25% of motor personal injury fraud cases feature credit hire, it’s imperative insurers have the right strategy in place, even more so considering it is expected that fraudulent credit hire claims will rise as a result of the reforms.”