Motor insurers have changed their settlement and compensation practices after the FCA found that some firms had short-changed customers on stolen or written off vehicle claims.
It means that an estimated 270,000 motorists are expected to receive £200 million in compensation for historic claims that were underpaid, breaching rules on handling claims fairly. Of this, £129 million has been paid to date to almost 150,000 customers.
The FCA has carried out detailed work with insurers, following an initial review last year, which found that in some cases, automatic deductions to payouts were made for assumed pre-existing damage. This particularly disadvantaged careful drivers who had looked after their vehicles and made it hard for them to buy like-for-like replacements. Insurers have now overhauled their claims processes in line with the regulator’s Consumer Duty.
In December 2022, the FCA warned insurers not to undervalue cars and other insured items when settling insurance claims and set out its expectations for firms when handling claims.
In June 2023, the FCA published a Voluntary Requirement in relation to vehicle valuations on the Financial Services Register. This required Direct Line Group to review five years of claims outcomes and pay redress where appropriate.
In March 2024, the FCA published a multi-firm review which identified shortcomings in insurers' valuation of vehicles. It engaged directly with firms with issues and committed to investigating further. The review included 12 firms and the regulator engaged with a further six firms, covering around 90% of the market.
In August 2025, Admiral announced it had set aside £50 million to compensate customers who were not given a fair settlement when claiming for stolen or written off cars.
If customers are due this compensation, the FCA says they will be contacted by their insurer. For anyone else who is dissatisfied with how a claim is handled, they should speak to their insurer first and then contact the Financial Ombudsman Service if they are not satisfied with the response.
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.”
