What insurance is legally required for a hired vehicle in England and Wales?

Under Part VI of the Road Traffic Act 1988 and the Motor Vehicles (Compulsory Insurance) Regulations 2000, it is a criminal offence to use, or to cause or permit any other person to use, a motor vehicle on a road or other public place without at least third-party motor insurance in force. The minimum legal requirement is third-party only cover, which covers the driver's liability for injury to other persons and damage to their property, but does not cover damage to the hired vehicle itself or injuries to the driver. Most vehicle hire companies provide detailed cover (which includes damage to the hired vehicle as well as third-party claims) as part of the hire rate, but the hirer should always verify the level of cover and the excess (the amount the hirer must pay towards any claim) before collecting the vehicle. It is the hirer's responsibility to confirm that they are insured to drive the vehicle and that all conditions of the insurance policy (including driving licence requirements, age restrictions, and geographical limitations) are satisfied. Driving without insurance is an offence under section 143 of the Road Traffic Act 1988, punishable by a fixed penalty of three hundred pounds and six penalty points, or an unlimited fine and disqualification on conviction at court.

What is a Collision Damage Waiver (CDW) and how does it work in the UK?

A Collision Damage Waiver (CDW) is an optional product offered by vehicle hire companies that reduces the hirer's financial liability in the event of accidental damage to the hired vehicle. It is not a contract of insurance — it is a contractual waiver by the hire company of part of the insurance excess. Without CDW, the hirer is typically liable for the full insurance excess amount (which may range from two hundred and fifty to one thousand pounds or more) in the event of any damage claim. With CDW, the excess is reduced to a lower amount (sometimes zero). CDW is charged as an additional daily rate on top of the hire charge. It is important to note that CDW typically excludes certain types of damage: windscreen, glass, tyre, roof, and underbody damage are commonly excluded, as is damage caused by the hirer's negligence, recklessness, or breach of the hire agreement (such as driving under the influence of alcohol). Theft of the vehicle is also usually excluded from CDW and may require a separate theft protection waiver. Under the Consumer Rights Act 2015, the hire company must provide clear and transparent information about what CDW covers and does not cover before the hirer agrees to purchase it. If the CDW terms are unclear or misleading, they may be challenged as unfair terms under the Act.

Who is responsible for traffic fines and congestion charges during a vehicle hire?

The hirer is responsible for all traffic offences, fixed penalty notices, parking charge notices, congestion charges, ULEZ (Ultra Low Emission Zone) charges, Clean Air Zone charges, and road tolls incurred during the hire period. Under section 172 of the Road Traffic Act 1988, when a vehicle is detected committing a traffic offence (such as speeding or running a red light), the registered keeper of the vehicle (in this case, the hire company) is required by law to provide the police with the name and address of the driver at the time of the offence. Failure to do so is itself a criminal offence carrying six penalty points and a one thousand pound fine. The hire company will therefore provide the hirer's details to the issuing authority, and the hirer will receive the notice of intended prosecution or fixed penalty notice directly. Most hire agreements entitle the hire company to charge an administration fee (typically fifteen to twenty-five pounds) for processing each notice. For the London Congestion Charge and ULEZ, the hirer should check whether the hired vehicle is compliant with ULEZ emission standards before entering the zone, as non-compliance results in a daily charge of twelve pounds fifty pence for the Congestion Charge and an additional twelve pounds fifty pence for the ULEZ charge (as of 2026), with significantly higher penalty charges for non-payment.

What happens if the hired vehicle is returned late?

If the hirer fails to return the vehicle by the agreed return date and time, most hire agreements provide for a late return fee, typically charged per day or part-day after a short grace period (usually one to two hours). The late return fee is usually higher than the standard daily hire rate to incentivise timely return. Under the Consumer Rights Act 2015, the late return fee must be transparent and proportionate — a fee that is extravagant or unconscionable relative to the hire company's actual loss may be challenged as an unfair term. If the vehicle is not returned within a reasonable period (typically 24 to 48 hours) without explanation, the hire company may report the vehicle as stolen to the police. Taking a vehicle and keeping it beyond the agreed period without the owner's consent may constitute an offence under section 12 of the Theft Act 1968 (taking a motor vehicle without the owner's consent, also known as TWOC), which carries a maximum sentence of six months' imprisonment and an unlimited fine on summary conviction. The hirer also remains liable for all hire charges, insurance, and any damage or depreciation during the overrun period.

Can the hire company repossess the vehicle during the hire period?

Yes. Most vehicle hire agreements contain a termination clause that entitles the hire company to terminate the agreement immediately and repossess the vehicle in specified circumstances, including: the hirer's material breach of the agreement (such as using the vehicle for an unlawful purpose, allowing an unauthorised driver, or taking the vehicle outside the permitted geographical area), the hirer's driving licence being suspended or revoked, non-payment of hire charges, or the hire company reasonably believing that the vehicle is at risk of damage, theft, or misuse. The right to repossess must be exercised lawfully — the hire company cannot use force or threats, and must comply with any applicable consumer protection legislation. Under the Consumer Rights Act 2015, a termination clause that allows the hire company to terminate without reasonable cause or without giving the hirer an opportunity to remedy a breach may be challenged as an unfair term. In practice, repossession is a last resort, and most hire companies will first attempt to contact the hirer and resolve the issue before taking the vehicle back.

Vehicle Hire Agreement (UK)

Vehicle Hire Agreement

VEHICLE HIRE AGREEMENT

This Vehicle Hire Agreement (the "Agreement") is made on [Effective Date] between:

The Owner: [Owner Name] (Company No. [Owner Company Number]), of [Owner Address], [Owner City], [Owner County] [Owner Postcode], telephone [Owner Phone], email [Owner Email] (hereinafter the "Owner"); and

The Hirer: [Hirer Name], of [Hirer Address], [Hirer City], [Hirer County] [Hirer Postcode], telephone [Hirer Phone], email [Hirer Email] (hereinafter the "Hirer").

The Owner is the registered keeper or authorised agent of the vehicle described herein and agrees to hire the vehicle to the Hirer subject to the terms and conditions set out below.

1. VEHICLE DESCRIPTION

The Owner agrees to hire to the Hirer the following vehicle: [Vehicle Description], registration number [Vehicle Registration], fuel type [Fuel Type] (the "Vehicle"). The odometer reading at the time of collection is [Current Mileage]. The fuel level at collection is [Fuel Level].

The Hirer acknowledges having inspected the Vehicle prior to collection and confirms that it is in acceptable condition, free of material defects not previously disclosed by the Owner. A Vehicle Condition Report shall be completed and signed by both Parties at the time of collection and return.

2. DRIVING LICENCE AND ELIGIBILITY

The Hirer represents and warrants that the Hirer holds a valid full driving licence issued by the DVLA (or a valid full licence issued by an EU/EEA member state, or a valid International Driving Permit together with a full national licence), licence number [Hirer Licence Number], categories [Hirer Licence Category], and that the licence has not been suspended, revoked, or endorsed with more than six (6) penalty points. The Hirer confirms they are at least 21 years of age (or such minimum age as specified by the Owner's insurance policy) and have held a full driving licence for at least twelve (12) months.

The Hirer shall maintain a valid driving licence throughout the entire hire period and shall immediately notify the Owner if the licence is suspended, revoked, or endorsed with any penalty points during the hire period. Failure to hold a valid driving licence at any time during the hire period constitutes a material breach of this Agreement.

3. HIRE PERIOD AND LOCATIONS

The hire period shall commence on [Hire Start Date] and shall terminate on [Hire End Date] (the "Hire Period"), unless earlier terminated in accordance with the provisions of this Agreement.

The Vehicle shall be collected from [Collection Location] and returned to [Return Location]. Failure to return the Vehicle by the agreed date and time may result in additional charges and, in the event of a prolonged and unexplained failure to return, may constitute an offence under section 12 of the Theft Act 1968 (taking a conveyance without the owner's consent).

4. HIRE CHARGES AND PAYMENT

The Hirer agrees to pay the Owner a hire charge of £[Hire Rate] [Hire Rate Period] (inclusive of VAT at the prevailing rate) for the Hire Period. Payment shall be made via [Payment Method] in full at or before the commencement of the Hire Period unless otherwise agreed in writing.

The Hirer shall provide a security deposit of £[Security Deposit] (the "Deposit") prior to collection of the Vehicle. The Deposit shall be held by the Owner and returned to the Hirer within [Deposit Return Days] working days of the Vehicle's return, less any deductions for damage (beyond fair wear and tear), excess mileage charges, fuel shortfall, cleaning costs, late return fees, traffic penalties, or other amounts owed under this Agreement. The Owner shall provide an itemised statement of any deductions made from the Deposit.

5. MILEAGE AND FUEL

The Hirer is permitted a mileage allowance of [Mileage Allowance] during the Hire Period. Any mileage in excess of the allowance shall be charged at [Excess Mileage Rate] pence per mile. The odometer reading shall be recorded at collection and return.

Fuel Policy: [Fuel Policy]. The Hirer shall return the Vehicle in accordance with the fuel policy stated above. Failure to do so shall result in a refuelling charge at the prevailing forecourt rate plus a reasonable administration fee.

6. INSURANCE

Motor insurance for the Vehicle during the Hire Period is provided by [Insurance Provider], policy number [Insurance Policy Number], providing [Insurance Type] cover as required by Part VI of the Road Traffic Act 1988 and the Motor Vehicles (Compulsory Insurance) Regulations 2000. A certificate of motor insurance or cover note shall be made available to the Hirer at the time of collection.

The insurance excess (the amount the Hirer is liable for in the event of any claim) is £[Excess Amount]. The Hirer acknowledges that the Hirer shall be personally responsible for paying the excess amount in full in the event of any accident, damage, or theft, regardless of fault, unless a Collision Damage Waiver has been purchased.

The Hirer shall comply with all conditions of the insurance policy at all times. Any act or omission by the Hirer that invalidates the insurance cover (including but not limited to driving under the influence of alcohol or drugs, driving without a valid licence, or using the Vehicle outside the permitted geographical area) shall render the Hirer personally liable for the full cost of any damage, loss, or third-party claim.

7. USE RESTRICTIONS AND HIRER'S OBLIGATIONS

The Hirer agrees to operate the Vehicle in a safe and lawful manner in compliance with all applicable road traffic legislation, including the Road Traffic Act 1988, the Road Traffic Regulation Act 1984, and the Highway Code. The Hirer shall not:

(a) allow any person not named on this Agreement to drive the Vehicle; (b) use the Vehicle for any unlawful purpose; (c) drive the Vehicle whilst under the influence of alcohol or drugs (including prescription medication that impairs driving ability); (d) use the Vehicle for hire or reward, racing, rallying, pace-making, or any competitive event; (e) use the Vehicle for towing unless expressly permitted; (f) take the Vehicle outside England and Wales without the Owner's prior written consent; (g) sub-hire or transfer possession of the Vehicle to any third party; (h) smoke in the Vehicle; or (i) carry passengers or loads in excess of the Vehicle's stated capacity.

The Hirer shall maintain the Vehicle in good condition during the Hire Period, ensure adequate tyre pressure and fluid levels, and promptly report any mechanical fault, warning light, accident, damage, or theft to the Owner.

8. TRAFFIC OFFENCES, FINES, AND CONGESTION CHARGES

The Hirer shall be solely responsible for all fixed penalty notices, parking charge notices, congestion charges (including the London Congestion Charge and ULEZ charges), road tolls, and any other fines or charges incurred during the Hire Period. The Owner shall be entitled to charge an administration fee of a reasonable amount (not exceeding twenty-five pounds) for each notice or charge that the Owner is required to process. If the Owner receives a notice requiring identification of the driver, the Owner shall provide the Hirer's details to the relevant authority as required by section 172 of the Road Traffic Act 1988.

9. DAMAGE, LOSS, AND LIABILITY

The Hirer shall be liable for all damage to or loss of the Vehicle occurring during the Hire Period (from the time of collection to the time of return), subject to the insurance excess and any CDW purchased. In the event of an accident, theft, or damage, the Hirer shall: (a) notify the Owner immediately by telephone; (b) not admit liability or make any offer of settlement to a third party; (c) obtain the details of all other parties involved and any witnesses; (d) report the incident to the police if required by law (section 170 of the Road Traffic Act 1988); and (e) complete the Owner's accident report form within twenty-four (24) hours.

The Hirer shall be responsible for the insurance excess, repair costs (where not covered by insurance), loss of use, diminution in value, and any administrative or recovery fees arising from damage or loss during the Hire Period.

10. DATA PROTECTION

The Owner shall process the Hirer's personal data in accordance with the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018. Personal data collected under this Agreement shall be processed for the purposes of administering the hire, managing insurance claims, complying with road traffic obligations (including responding to notices under section 172 of the Road Traffic Act 1988), and enforcing the terms of this Agreement. Full details are set out in the Owner's Privacy Policy.

11. TERMINATION

The Owner may terminate this Agreement immediately and repossess the Vehicle if: (a) the Hirer breaches any material term of this Agreement; (b) the Hirer's driving licence is suspended, revoked, or endorsed in a manner that invalidates the insurance cover; (c) the Hirer fails to make any payment when due; (d) the Vehicle is used in breach of the restrictions in Clause 9; or (e) the Owner reasonably believes the Vehicle is at risk of damage, theft, or misuse. Upon termination, the Hirer shall return the Vehicle immediately to the location specified by the Owner and shall remain liable for all outstanding charges and any damage to the Vehicle.

12. GOVERNING LAW AND JURISDICTION

This Agreement shall be governed by and construed in accordance with the laws of England and Wales. The courts of England and Wales shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement, subject to the Hirer's statutory right under the Consumer Rights Act 2015 to bring proceedings in the courts of the jurisdiction in which the Hirer is domiciled.

13. GENERAL PROVISIONS

This Agreement constitutes the entire agreement between the Parties with respect to the hire of the Vehicle and supersedes all prior negotiations, representations, and agreements, whether written or oral. No amendment shall be valid unless made in writing and signed by both Parties.

If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect. Nothing in this Agreement is intended to or shall create rights enforceable by any person who is not a party to it under the Contracts (Rights of Third Parties) Act 1999.

Nothing in this Agreement shall exclude or limit the Owner's liability for death or personal injury caused by negligence, fraud, or any liability that cannot lawfully be excluded under the Consumer Rights Act 2015 or any other applicable legislation.

IN WITNESS WHEREOF, the Parties have executed this Vehicle Hire Agreement as of the date first written above.

Signed on behalf of the Owner:

Name: [Owner Name]

Signature: ____________________________

Date: [Owner Sign Date]

Signed by the Hirer:

Name: [Hirer Name]

Signature: ____________________________

Date: [Hirer Sign Date]

Owner / Hire Company

________________

Signature

Date: ________________

Hirer

________________

Signature

Date: ________________

Maintained by Vladislav Sergienko, Founder·Template last modified: 2026-06-23·Report an error

What Is a Vehicle Hire Agreement (UK)?

A Vehicle Hire Agreement in the United Kingdom sets the services to be provided, the fees, the timetable, and each side's responsibilities for the engagement, and takes its legal force from the Road Traffic Act 1988.

The legal framework governing vehicle hire in England and Wales is drawn from several overlapping statutes. The most important is the Road Traffic Act 1988, which establishes the fundamental requirements for driving on public roads in Great Britain: the driver must hold a valid driving licence (Part III), the vehicle must be insured against third-party risks (Part VI), and the vehicle must be roadworthy and properly maintained. The Motor Vehicles (Compulsory Insurance) Regulations 2000 implement the EU Motor Insurance Directives into domestic law and set the minimum level of insurance cover that must be in place before a vehicle may be used on a road or public place.

From a consumer protection perspective, the Consumer Rights Act 2015 applies to all vehicle hire agreements where the hirer is a consumer (an individual acting outside their trade, business, craft, or profession). The Act requires the hire company to provide the service with reasonable care and skill (section 49), provides the consumer with a right to repeat performance or a price reduction if the service does not conform to contract (sections 54-56), and makes it unlawful to use unfair contract terms (Part 2). The Competition and Markets Authority and local Trading Standards authorities are empowered to enforce the fairness provisions.

The Theft Act 1968 is relevant in two respects. Section 12 creates the offence of taking a conveyance without the owner's consent (TWOC), which may apply where a hirer fails to return a vehicle at the end of the hire period without explanation or authorisation. Section 1 creates the offence of theft, which may apply where a hirer has no intention of returning the vehicle at all.

Data protection obligations arise under the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018. Hire companies collect substantial personal data from hirers — names, addresses, driving licence numbers, payment card details, and potentially GPS tracking data — all of which must be processed lawfully, fairly, and transparently. The hirer has the right to know what data is being collected, why it is being processed, and how long it will be retained.

For commercial vehicle hire (business to business), the Supply of Goods and Services Act 1982 implies terms that the vehicle will be of satisfactory quality and reasonably fit for purpose, and that the hire service will be carried out with reasonable care and skill. The Late Payment of Commercial Debts (Interest) Act 1998 may apply to late payment of hire charges in business-to-business transactions.

Additional regulatory considerations include the London Congestion Charge and ULEZ (Ultra Low Emission Zone) charges under the Greater London Authority Act 1999, Clean Air Zone charges in cities such as Birmingham, Bristol, and Bath, and road tolls. The hire agreement should clearly allocate responsibility for these charges to the hirer.

When Do You Need a Vehicle Hire Agreement (UK)?

A vehicle hire agreement is needed whenever a motor vehicle is hired out to another person in England or Wales and both the owner and the hirer need a clear written record of their respective rights, obligations, and liabilities. Without a properly drafted agreement, disputes over damage, insurance, charges, and return conditions are difficult to resolve and may result in costly litigation.

When a car hire company, van rental operator, or fleet management business provides vehicles for self-drive hire to individual customers or businesses, a thorough hire agreement is essential for every booking. The agreement protects the hire company by documenting the vehicle's condition at collection, setting out the hire charges and payment terms, allocating responsibility for damage, fines, and fuel, and establishing the procedure for late returns.

When a business hires vehicles for its employees to use — whether for sales trips, deliveries, site visits, or company events — a vehicle hire agreement confirms that both the hiring business and the hire company understand the insurance arrangements, the permitted use of the vehicle, and the consequences of damage or misuse. The business may be vicariously liable for the actions of its employees while driving hired vehicles, making clear contractual terms essential.

When a private individual lends their personal vehicle to a friend, family member, or colleague for a temporary period, a hire agreement (even for a nominal charge or at no charge) protects the owner by documenting the vehicle's condition, confirming that the borrower has a valid driving licence and insurance cover, and setting out the borrower's obligations regarding fuel, mileage, and care of the vehicle.

When a vehicle is hired for a special event — a wedding, holiday, house move, or festival — the hire agreement addresses the specific risks associated with the occasion, including mileage limits, geographical restrictions (such as taking the vehicle abroad), the number of authorised drivers, and the return condition expected.

When a hire company operates a fleet of electric or hybrid vehicles, additional provisions are needed in the hire agreement to address charging obligations, range limitations, the location of the nearest charging points, and the hirer's responsibility for returning the vehicle with an adequate charge level.

When a vehicle is hired on a long-term basis (monthly or longer), the hire agreement should address servicing and maintenance responsibilities, MOT obligations (for vehicles over three years old), insurance renewal, and the process for reporting defects or arranging repairs during the hire period.

What to Include in Your Vehicle Hire Agreement (UK)

Parties and Identification — Identify the vehicle owner or hire company by their full registered name, Companies House number (if a company), trading address, telephone number, and email address. Identify the hirer by their full name, home address, telephone number, email address, DVLA driving licence number, licence categories held, and date of birth. If there is an additional authorised driver, their details must also be recorded.

Vehicle Description — Describe the vehicle fully: make, model, year, colour, registration number, fuel type, and any distinguishing features. Record the odometer reading and fuel level at the time of collection. A Vehicle Condition Report (noting any existing damage, scratches, dents, or wear) should be completed and signed by both parties at collection and at return. Photographs are strongly recommended.

Hire Period and Locations — State the start and end dates of the hire period, the collection location, and the return location. Specify the time at which the vehicle must be returned and the consequences of late return. Include a provision addressing what happens if the hirer wishes to extend the hire period (typically requiring the Owner's prior agreement and additional payment).

Hire Charges and Payment — Specify the hire rate in pounds sterling, whether it is a daily, weekly, or monthly rate, and whether VAT is included. State the total estimated charge, the payment method, and when payment is due. Address the security deposit: the amount, how it is held, when it will be returned, and the circumstances in which deductions may be made (damage, excess mileage, fuel shortfall, cleaning, fines, late return fees).

Insurance — State the name of the insurance provider, the policy number, and the type of cover (thorough, third party fire and theft, or third party only). State the excess amount clearly. Explain what the insurance does and does not cover, and the hirer's obligation to comply with all policy conditions. Address the optional Collision Damage Waiver (CDW), explaining what it covers, what it excludes, the daily rate, and the reduced excess.

Mileage and Fuel — Specify the mileage allowance included in the hire rate and the charge per excess mile. State the fuel policy (full to full, same to same, or pre-paid) and the refuelling charge if the vehicle is returned with insufficient fuel.

Driving Licence and Eligibility — Require the hirer to hold a valid full driving licence (UK or recognised foreign licence), meet the minimum age requirement, and have no more than a specified number of penalty points. Address the consequences of the hirer losing their licence during the hire period.

Use Restrictions — Prohibit unlawful use, driving under the influence, racing, towing (unless permitted), sub-hiring, smoking, and taking the vehicle outside the permitted geographical area without prior consent. Address the hirer's obligations in the event of an accident or breakdown.

Traffic Offences and Charges — Allocate responsibility for parking fines, speeding tickets, congestion charges, ULEZ charges, and tolls to the hirer. Explain the section 172 Road Traffic Act 1988 procedure for identifying the driver to the police.

Governing Law — State that the agreement is governed by the laws of England and Wales and that the English courts have exclusive jurisdiction, subject to the consumer's right to bring proceedings in their local court under the Consumer Rights Act 2015.

Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. The forms-legal.com Vehicle Hire Agreement (UK) template covers the mandatory elements under Companies Act 2006.

Cite this page

Reference this free template in an article, syllabus, or research note:

APA

Forms Legal. (2026). Vehicle Hire Agreement (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/business/contracts/vehicle-hire-agreement-uk

MLA

"Vehicle Hire Agreement (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/business/contracts/vehicle-hire-agreement-uk.

BibTeX

@misc{formslegal-vehicle-hire-agreement-uk,
  author       = {{Forms Legal}},
  title        = {Vehicle Hire Agreement (UK) (United Kingdom)},
  year         = {2026},
  howpublished = {\url{https://forms-legal.com/uk/business/contracts/vehicle-hire-agreement-uk}},
  note         = {Free legal document template. Based on Companies Act 2006}
}

Also available for these jurisdictions:

Frequently Asked Questions

Based on Companies Act 2006 — Template last modified June 2026Verify the source →

This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer

Found an error? Let us know