Intervention letters: an important strategy for tackling credit hire
Ten years on from the Court of Appeal decision in Copley v Lawn (2009) - this case, together with the intervention policies insurers continue to develop - remains as important as ever when approaching credit hire claims.
Whilst this was somewhat of a frustrating decision for insurers at the time, the guidance from the Court of Appeal seemed, on the face of it, quite simple. A claimant has an ongoing duty to mitigate their loss and third party intervention is perfectly acceptable in order to provide a claimant with the avenue to do so.
Attempts followed to develop compliant intervention letters (sent to the claimant as soon as possible at the first notification of loss stage) offering the option of a hire vehicle through and at the cost of the insurer. Rather than the claimant obtaining a hire vehicle from a Credit Hire Organisation (CHO) or otherwise.
However, there are strict criteria that must be met in order for an intervention letter to be upheld in court and, unfortunately, these are often too generic and do not meet that criteria. It may be that intervention is somewhat underestimated as a tool to reduce the rate in credit hire claims, but this is unwise. Some examples of how these are inappropriately drafted and fail to comply with the criteria set out in Copley and Sayce v TNT (2011), include:
- Adopting a tone that may appear threatening.
- Having the appearance of containing all of the necessary information, but in reality being elongated and confusing.
- Continuing to offer ‘free’ services (i.e. without outlining the actual cost to the insurer).
- They include requests for information.
Getting the intervention policy right
CHOs are well aware of the issues a compliant intervention letter will cause them in respect of the rate they are able to recover. A strong intervention policy can result in significant savings in terms of third party take up, negotiating a reduced settlement pre-issue, and fighting those credit hire cases that go on to be litigated.
However, CHOs can spot and comfortably ignore generic intervention letters in the full knowledge that they will not stand up in court. Courts will not simply allow insurers to use a tick box exercise when it comes to the contents of an intervention letter and anyone seeking to do so should not be surprised when a court rejects their intervention rate. Full and proper consideration must be given to an intervention policy and the specific contents of the letter.
We know from the guidance in Copley and Sayce, of the need to appreciate that victims of road traffic accidents can be in a vulnerable state of mind. Therefore, it is extremely important to recognise this in the tone of the intervention letter and to include all of the information necessary to put the third party in a position to make an informed decision. As noted above, continuing to offer ‘free services’, and making requests for information about the claim does not take this state of mind into account or offer the vital information required to make a fully informed decision.
Whilst there will inevitably be some cross over, each insurer will have information specific to them that must be included. It is therefore important to undertake a full review and bespoke re-draft, as opposed to obtaining a generic intervention letter and inserting case specific information where necessary. Despite what is often thought, one intervention letter rarely translates from one insurer to another.
So, whilst a compliant intervention letter can be an effective means for tackling the rate applied in credit hire claims, it is important to get them right.