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Court takes a stand over replacement vehicles

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Drivers who accept vehicles from credit hire companies after car accidents could be left thousands of dollars out of pocket following a series of NSW Supreme Court decisions.

An appeal case has drawn a line under exorbitant fees charged to insurers by such companies, which provide replacement hire cars to not-at-fault drivers with the promise that the at-fault driver’s insurer will later cover the cost.

In Nguyen v Cassim, credit hire company Right2Drive provided a hire car to Azad Cassim after his BMW sedan was involved in an accident with a vehicle driven by Dylan Nguyen, who was found to be at fault.

Right2Drive later charged Mr Nguyen’s insurer a rate of $204 per day for a Nissan Infiniti over 84 days, for a total cost of more than $17,000. This was alleged to be well above the market rate.

After the NSW Local Court granted the full amount as damages to Mr Cassim, the insurer appealed the decision.

The NSW Supreme Court found that the test for a claim of damages is one of need, not actual financial loss, and that a cheaper vehicle such as a Toyota Corolla would have met Mr Cassim’s needs for less than half the cost. The court scrapped the previous orders and awarded $7476 to Mr Cassim.

In two concurrent cases, reduced amounts compared to the actual hire cost were awarded in the first instance, on the basis that a prestige car was not needed to meet the needs of the claimants.

The Insurance Council of Australia has welcomed the rulings.

“Exorbitant replacement vehicle claims have put pressure on the cost of motor vehicle insurance for consumers in recent years,” a spokesman told

“The decision that need and inconvenience should be the ultimate consideration when determining recoverable replacement vehicle costs may help alleviate premium cost pressures.”

Moray & Agnew special counsel Nicholas Sullivan and lawyer Stuart Bryson say the judgement shows that appropriate compensation will be decided with reference to multiple factors, including the driver’s needs, the car value, the value of available replacement vehicles and the prevailing market rate.