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Court Ruling on Credit Hire Agreements

The Supreme Court delivered its judgment in Armstead v Royal & Sun Alliance Insurance Company on 14th February 2024.

In this unfortunate case the claimant, Ms Armstead was involved in two motor accidents, both of which were not her fault.

It is commonplace that following a non-fault motor accident, a claimant will look to hire an alternative car and enter into a credit agreement with the hirer.

This is exactly what Ms Armstead did and in an unfortunate series of events she was involved in a further accident whilst driving the hire car, which again was not her fault.

The credit hire agreement between Ms Armstead and Helphire contained a clause that if the vehicle was damaged she would be required to pay Helphire’s daily rate up to a maximum of 30 days for loss of use whilst the hire car was being repaired.

The insurers of the person who caused the second accident, Royal & Sun Alliance admitted liability, and therefore understandably Ms Armstead looked to them to recover the sum for loss of use.

The key issue here was whether the claim for that sum was too remote.

Surprisingly, before this Supreme Court decision there was no binding authority of the question of who bears the burden of proof about remoteness.

Whilst the lower courts found in favour of RSA, ie that the claim was too remote, the Supreme Court overturned that decision and found in favour of Ms Armstead.

There are two main issues of significance arising from this judgment; firstly where negligence resulting in the loss has been established, the burden of proof is on the defendant to show that the loss is too remote for the claimant to recover and secondly, the decision confirms that economic loss resulting from physical damage to property is not irrecoverable in negligence simply where there is a contract between the claimant and a third party.

We are pleased to say our Claimsafe ATE policies cover claims for credit hire or credit repair and if you would like to speak to us or obtain further information then please call 0870 766 9997, or

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