Claiming car hire after an accident in Australia

Man on the phone making CTP Claim for the car accident


If you have been in a car accident in Australia and it was caused by another driver, you may be entitled to claim car hire expenses from the at-fault driver. This can help you get back on the road quickly and without the added stress of figuring out transportation while your own vehicle is being repaired or replaced. In this article, we will discuss the legal basis for a not-at-fault driver to claim car hire costs.

At Denning Insurance Law, we assist clients with an array of issues and disputes stemming from motor vehicle accidents in which our clients were unfortunately involved.

Most often, we assist clients with their injury claims.  Those claims require us to assess our clients’ injuries and losses, and then negotiate with the relevant Compulsory Third Party insurer to achieve a suitable damages settlement.

But we also help clients with their property damage claims.  They types of claims are varied and may include the following scenarios:

Often, these property damage claims can become quite complicated due to the terms of the insurance policy and the state of the law.  At Denning Insurance Law, we can assist you with the various twists and turns should you experience a similar situation.

However, one query which often arises from clients, as is discussed in this article, is – Can I claim for my replacement car hire if my car is damaged in a motor vehicle accident?

The Legal Principle

When a driver causes a car crash and damages someone else’s vehicle, they are expected to pay for the reasonable repairs to fix the other driver’s car. 

However, the additional costs incurred by the driver of the damaged motor vehicle have become somewhat of a grey area due to differing judgments in different jurisdictions and the varied approaches taken by multiple insurers in the market.

Fortunately, the High Court provided great clarity on the issue of car hire in 2021.

The High Court Case

The High Court handed down the decision of Arsalan v Rixon; Nguyen v Cassim [2021] HCA 40.  The decision considered two separate appeals which dealt with the same issues; namely – Was the negligent driver who caused the motor vehicle collision liable for the costs of the not-at-fault driver hiring a substitute car of equivalent value until the damaged car was repaired?

The Facts

In both claims, the not-at-fault drivers owned/drove expensive vehicles at the time of the collisions (i.e. an Audi A3 and a BMW 535i). 

Following the collisions, these owners hired similarly expensive substitute vehicles (i.e. an Audi A3 at a cost of $12,829.91 and a Nissan Infiniti Q50 at a cost of $17,158.02) whilst their damaged vehicles were being repaired.

Prior Judgments

After separate hearings in the Local Court, the two unrelated proceedings were heard together in the Supreme Court of NSW and the Court of Appeal, before also being considered together by the High Court.

Regarding the Audi A3 claim, the Local Court accepted that the owner needed a replacement car but his safety concerns were a preference rather than a need. As a result, he was not entitled to recover the cost of the particular car he hired.

Therefore, the Local Court awarded damages of $4,226.25 which was the market rate of hiring a Toyota Corolla for the period in question. The owner appealed.

Regarding the BMW535i claim, the Local Court held that while the owner established a need for a replacement car, a Toyota Corolla would have met that need for a lower sum of $7,476.

However, the Local Court awarded the full amount of hire costs incurred because the Toyota was not of equivalent value to his BMW. The negligent driver appealed.

The Court of Appeal of the Supreme Court of NSW allowed the respondents to recover their hire costs from the appellants. The appellants sought special leave and appealed to the High Court.

The High Court Judgment

The High Court unanimously dismissed the appeals.  In other words, the High Court held that the owners were entitled to damages being the reasonable cost of hiring a replacement vehicle equivalent to their own vehicle, as a result of the physical inconvenience and loss of amenity resulting from the negligence of the driver who caused the damage during the collision.

In essence, the High Court’s decision stemmed from the recognition in Australian law of loss of amenity, in the sense of loss of pleasure or enjoyment, in the use of a chattel, as a recoverable head of damage.

The High Court also found that the adverse consequences experienced by the owners went beyond simple inconvenience or need. The owners had suffered a loss of the intangible benefits stemming from their ownership of prestige cars and a deprivation of the use of a car having their specifications and performance.

As a result, it was not unreasonable for the owners to hire equivalent cars to mitigate their loss.

Relevance of Decision

The High Court has now provided clear guidance as to the damages which flow from the loss of use of a chattel following a tortfeasor’s act.

The decision allows owners in similar circumstances to have some assurance as to how they may be compensated if they incur the cost of hiring a substitute vehicle following a motor vehicle collision.

If you require any assistance after sustaining any loss or damage after a motor vehicle accident in Queensland, please contact us at Denning Insurance Law.