MORE than 270,000 motorists will receive compensation over car insurance failures, it has been revealed.
The Financial Conduct Authority (FCA) has said drivers will receive a total of £200million in compensation over the failures.
1
The cash is being handed out after the FCA found some insurers had short-changed customers on stolen or written off vehicle claims.
When drivers claim on their car insurance where their vehicle is written off or stolen, they should be offered a payout equivalent to the fair market value of their car.
This is the amount their car should have been worth at the time it was stolen or damaged.
A review last year found that in some cases insurers were making automatic deductions to payouts after they assumed there was pre-existing damage to vehicles.
Read more on compensation
The FCA said the practices breached its rules on handling claims fairly.
So far, £129million has been paid out to almost 150,000 customers.
If you’re due compensation, you don’t need to do anything for now as you will be contacted by your insurer.
Sarah Pritchard, deputy chief executive of the FCA, said: “We’ll step in when consumers aren’t getting fair value – and we are pleased to see that the practices which led to some unfair payouts have already changed.
“This means thousands of motorists are getting back what their car was really worth, in cases where cars have been stolen or written off.
“If you’re owed compensation, your insurer will contact you, or will have already done so – there’s nothing you need to do.”
The FCA says insurers have now changed their practices.
It said it had warned insurers back in 2022 not to undervalue cars and other insured items when settling insurance claims.
The regulator carried out a review last year looking into how insurers valued vehicles and found many were short changing customers.
The review included 12 insurers and the regulator also spoke with a further six.
The FCA has said it won’t comment on which insurers are involved.
But Admiral revealed last month it had set aside cash to compensate customers who may have been impacted.
In its half-year results, the company admitted to failing to respond quickly enough to rising used car prices when settling claims.
Admiral customers who made a claim on a stolen or written-off vehicle between 2019 and 2025 will be contacted by the company if they’re owed compensation, the FCA said.
It comes as millions of drivers are in line to get up to £950 in compensation for car finance loans.
The city watchdog is set to launch a refund scheme for motorists stung by “hidden” commission payments.
Up to £18billion is expected to be paid out as early as next year.
The Financial Conduct Authority is expected to confirm the details by October on how this will work.
What is car insurance?
Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for…
Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident.
As a minimum, it protects you against any damage you case to other road users, the public or their property – these are called third parties.
You only need to claim on your car insurance when an accident is your fault.
If another motorist is to blame, their insurance should pay out instead.
Car insurance, unlike home insurance, is a legal requirement and if you don’t have it you can be fined up to £1,000.
You can also have your vehicle seized and destroyed.
However, you don’t need to insure your car if it is classed as “off-road”, or holds a statutory off road notification (SORN).
The vehicle has to be kept on private land and not a public highway though.
What should you do if you think you’re owed money?
As we mentioned, your insurer should be in touch with you if they believe you’re due compensation.
But if you’re not happy with how your insurance claim has been handled, you can reach out to your insurer.
If you’re not satisfied with their response, you can then get in touch with the Financial Ombudsman Service.
You don’t need to use a Claims Management Company to complain or make a claim.
