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Books could be written on the subject as cases have been rumbling around the courts for the last decade.
But the current core guidance as to whether credit hire charges are enforceable follows from two Accident Exchange cases - Barker and Barker v First West Yorkshire Limited (2007) and Corbett v Gaskin (2007)* which mean (broadly) that credit Hire charges are enforceable providing they fall within agreed ABI rates.
On the income/assets issue it comes down to the legal concept of "impecuniosity".
The courts broadly accept that no matter how much money you have insurers cannot ask you to work on a "pay and claim" basis if you could reasonably show that the money you were being asked to spend was being deprived from you - which would clearly be the case. It is not necessary for you to prove that it was being earmarked for something else.
The key guidance in this is from Lagden v O'Connor (2004) when it was clarified that "in the present context, impecuniosity signifies an inability to pay car hire charges without making sacrifices, which the plaintiff could not reasonably be expected to make" and "lack of financial means is almost always a question of priorities".
Insurers will occasionally chance their arm on the "impecuniosity" issue threatening to demand bank statements and credit card bills etc. but it is almost always part of a negotiating tactic to reduce the bill and cases never seem get to court.
*[Corbett v Gaskin was certainly not a total victory for the credit hirers. Mr Corbett was found by the courts to be an astute businessman who could have obtained his vehicle (a Jaguar XJ8) for £30,000 less than the bill sent in by the credit hirers and the judge awarded them spot rates.]
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