If you were underpaid when your car was stolen and written-off claims you could be entitled to benefit from a £200m compensation scheme.
More than a quarter of a million motorists are set to share £200 million in compensation after the Financial Conduct Authority (FCA) uncovered widespread failings in how insurers handled claims for stolen and written-off vehicles.
For years, some insurers reduced payouts by deducting amounts for supposed “pre-existing damage,” even when no such damage had been recorded. This left drivers underpaid and struggling to afford like-for-like replacements. Following a regulatory crackdown, the FCA has ensured that insurers overhaul their claims processes to deliver fairer outcomes.
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So far, around 150,000 policyholders have already received £129 million, with a further 120,000 expected to share an additional £71 million. The FCA confirmed motorists do not need to take action: insurers will contact anyone eligible directly. Customers unhappy with how their case was handled can complain to their insurer and, if necessary, escalate matters to the Financial Ombudsman Service. Importantly, the FCA stressed there is no need to use the legal services of a claims firm, which may take a cut of any payout.
This intervention is part of a broader push by the FCA to ensure insurers value vehicles fairly. Reviews since 2022 have found insurers were routinely undervaluing cars, with 18 major firms – covering 90% of the UK market – engaged in reforms. Some companies have already set aside large sums, with Admiral reserving £50 million for compensation in August 2025.
The scheme not only corrects historic unfairness but also sends a clear message: customers should receive the true value of their vehicles. While insurers face the challenge of volatile car prices and supply chain pressures, the regulator has made clear that fairness must come first. For motorists, this means long-overdue redress and reassurance that future claims will be treated more fairly.
For clients of Plan Insurance Brokers, it’s important to note that if you are ever dissatisfied with the service provided by your insurer in regards to any matter, including claims, our team will be on hand to offer independent, expert advice. We will seek to help bring the dispute to a fair and prompt resolution.
Am I Eligible for Compensation?
You may be entitled to a payout if:
- 🚗 Your car was stolen or written off in the past five years.
- 💰 Your insurer reduced your payout by deducting money for “pre-existing damage” that wasn’t recorded.
- 📝 You received a cash settlement instead of a repair, and believe the value was lower than your vehicle’s true market worth.
- 📩 You’ve been contacted by your insurer confirming that you are owed compensation (insurers are required to reach out directly).
What You Should Do
- ✅ Wait to hear from your insurer — most eligible motorists will be contacted automatically.
- ❌ No need to use services of a legal claims firm — they’ll take a cut of your payout, and you’re unlikely to require their assistance.
- 📞 If you think your claim was undervalued but haven’t heard anything, contact your insurer directly.
- ⚖️ Still unhappy? Escalate your complaint to the Financial Ombudsman Service for free.
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