More than 270,000 due slice of £200million compensation over car insurance errors

More than 270,000 drivers are set to receive a share of £200million in compensation over car insurance errors.

An investigation by the financial regulator has found some drivers were left out of pocket after their vehicle was stolen or written off. This includes some cases where automatic deductions to payouts were made for assumed pre-existing damage.

The Financial Conduct Authority (FCA) said this "particularly disadvantaged careful drivers who had looked after their vehicles and made it hard for them to buy like-for-like replacements".

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The FCA claims most insurers have now made changes to improve their claims processes. An estimated 270,000 motorists are expected to receive £200million in compensation for historic claims that were underpaid.

Of this, £129 million has already been paid to almost 150,000 customers. If you are due compensation, you will be contacted by your insurer.

The FCA has urged customers not to use a Claims Management Company (CMC) to complain or make a claim, as they will take a cut of your compensation.

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 action from the FCA comes after it introduced its Consumer Duty protections in 2023, which require firms to show they are acting in the best interests of customers. Wider action from the FCA ensures customers get fair, competitive prices and claims are handled fairly and quickly.

Save money on car insurance

If you're coming to the end of your car insurance policy, then now is the time to start shopping around for a better deal. If you find a cheaper price elsewhere, make note of it and then contact your existing provider to see if they can beat it.

Use a comparison site to check prices elsewhere. Make sure you always compare prices on multiple sites, as some insurance firms won't be covered across all the major comparison websites.

Some of the most popular comparison sites include CompareTheMarket.com, GoCompare.com and Confused.com. If you do find a better deal, then you can switch and save money.

It is always better to pay for your car insurance in one go if you can, as splitting it into monthly payments will be more expensive in the long-run due to interest and admin fees.