270,000 UK drivers owed £200m in insurance compensation after payout error
Around 270,000 motorists whose cars have been written off or stolen are owed compensation from insurers due to an error.
Hundreds of thousands of Brits making these claims have been underpaid, according to the Financial Conduct Authority.
Insurance companies have reportedly made deductions for "assumed" pre-existing damage, even without evidence, the watchdog says.
It argues this breached fairness rules by preventing drivers from being able to buy replacements.
The total payout amounts to an expected £200m – and drivers will be contacted if they’re in line for a portion.
Around 150,000 people have already been issued compensation, with £71m remaining to be distributed by early 2026.
Sarah Pritchard, the deputy chief executive of the FCA, said: “We’ll intervene when consumers aren’t receiving 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 receiving back what their car was truly 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.”
However, those in line for compensation have been advised to be cautious of scammers sending suspicious emails or texts.
In May, new drivers were warned of an increase in fake car insurance deals, which leave them uninsured and could lead to fines or driving bans.
Figures showed the issue has grown over 50% in two years, as fraudsters pretending to be brokers are increasingly targeting young drivers who face higher premiums.
The practice involves scammers, known as ‘Ghost Brokers,’ advertising bogus deals on popular sites such as Facebook, Instagram, Snapchat, and TikTok.
The scams are targeted at new drivers, including those insuring their first car and learners who need learner cover.
A spokesperson for the Association of British Insurers said: “Insurers work hard to deliver the best possible service for their customers. There has been a lot of volatility in the secondhand car market in recent years, which has created challenges for insurers when trying to set valuations. Our members have made changes to their settlement approach and taken the necessary steps to support customers.”
Head of Investigations
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