An estimated 270,000 motorists are set to receive a share of £200 million in compensation from car insurers after the Financial Conduct Authority (FCA) found they were underpaid when their vehicles were stolen or written off.
The FCA review revealed that insurers had undervalued vehicles when settling claims, with some payments automatically reduced for assumed pre-existing damage. This practice particularly affected careful drivers who had maintained their cars well, leaving them unable to purchase a like-for-like replacement.
Already, £129 million has been paid to nearly 150,000 customers, with insurers contacting those still owed money. The regulator noted that firms have changed their claims processes to prevent future underpayments.
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. If you’re owed compensation, your insurer will contact you, or will have already done so – there’s nothing you need to do.”
Cormac Bradley, senior actuarial director at Broadstone, highlighted challenges in valuing cars amid price fluctuations and supply chain pressures. The Association of British Insurers acknowledged the volatility in the secondhand car market and confirmed that members have adjusted their settlement approaches.
