If the car hire firm fails to recover all the costs, then it charges the driver who hired the car. They discover they have to pay up because they have signed a credit agreement.
Often the driver can find themselves caught at the centre of a bitter legal battle between two insurers fighting over the costs.
Insurance companies and the independent Financial Ombudsman Service report that these disputes are a growing concern. One insurer estimated they added �80 a year to a typical policy.
Yet this problem is largely of the insurers' own making. These accident management firms are exploiting loopholes in insurers' own rules, and the fact many firms don't provide the courtesy car they should.
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When you have an accident, your policy will set out the type of courtesy car to which you are entitled and for how long. If the accident is your fault, you can normally have a courtesy car for up to 30 days.
Even this is not simple as insurers can try to fob you off with a car that is far below the standard you need: for example, if you have a large saloon because you do a lot of motorway driving, the courtesy car you are often given is a compact.
When you are not liable for an accident, it will be up to the two insurers involved to sort out your needs.
This is where you can fall in to a black hole. Many insurance companies have agreements with accident management firms and pass on customers who need a courtesy car.
Worse though, breakdown companies and insurance brokers have also been found taking commission from accident management firms for passing on the details of drivers who have been in a crash.
Insiders claim someone who provides details of an accident gets a kickback of �50 to �100. For accidents with injuries, they could get up to �1,000 because details are then passed on to personal injury claims handlers.
The accident management company then approaches the driver, promising them an equivalent car to their own while it is being repaired. What is not always clear is that these cars are rented and the driver is signing an agreement to take the car on credit.
The accident management company foots the bill for the rental, then charges it back to the insurer.
A spokesman for the Ombudsman says: 'We have seen cases where the insurer put s pressure on the customer to go with one of these firms.
'They tell them this is the only way they can get an equivalent car for the time it takes their vehicle to be repaired.'
Because the costs are so inflated, many insurers are contesting the claims. One insurance company fighting back is German-owned Allianz Cornhill.
Mar t in Saunders, f rom Allianz, says: 'We are giving a message that we don't think people should be able to do this - particularly when they can afford to hire a car or have another one they can use.
'We need to fight these as a matter of principle for the consumer, who ultimately has to pay the cost of these claims.'
For tips on understanding your car insurance policy, log on to www. thisismoney. co.uk/insurers
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