Undervalued Car Claims: When Insurance Payouts Fall Short

Undervalued Car Claims

For years, motor insurers have been rewarded for running tight claims cost controls. But there are increasing concerns of insurers prioritising profits over their customers’ needs. Under the FCA’s Consumer Duty and a growing body of Ombudsman decisions, the expectation is now unambiguous: customers should receive good outcomes the first time, not only if they complain.
The FCA has criticised the practice of pitching initial write off offers below the insured vehicle’s estimated market value and then inching up only when challenged – an approach that inevitably rewards the confident and penalises the compliant. That can be unfair, and it sits awkwardly with the industry’s duty to deliver consistent outcomes.
If this sounds familiar, it should. Financial services has a long history of slow course corrections: PPI did not become a scandal overnight; it became one because a misalignment between firm incentives and fair customer outcome expectations was allowed to persist. Undervalued car claims are at risk of following a similar pattern – less visible than PPI, but with the same structural ingredients: information asymmetry, process habits that have deteriorated, and a real financial detriment when how we’ve always done it fails to keep up with the market and the regulator’s lens.

What Are Undervalued Car Claims?

When an insurer writes off your car, they are expected to pay the fair market value. An undervalued car claim happens when the payout offered falls short of what the car was really worth before the accident. This isn’t just a “small difference” – many drivers can be left thousands of pounds worse off* unless they challenge the insurer’s valuation.

*Based on average won claims, Jan-Sept 2024. Verification: allegiant.co.uk/wofc. Any refund depends on your individual circumstances and is not guaranteed.

Market Changes Affecting Undervalued Car Claims

Two things have changed the ground under everyone’s feet.

1. A shifting used car market
The Ombudsman has explicitly recognised that “because of recent changes in the market, we are increasingly hearing of cars selling either for or close to their advertised price.”[1] The UK used car market is highly dynamic, shaped by factors such as supply and demand, economic conditions, and seasonal trends.
Since Brexit, supply chain disruptions and rising inflation have pushed prices higher, while the pandemic and semiconductor shortages have further tightened supply. This combination of increased demand and limited availability has significantly reduced the scope for negotiation, meaning that while buyers can still bargain, the discounts achievable are generally smaller than in previous years[2]. In short, used cars values have risen 30%+ since pre pandemic prices. [3]
2. Regulatory pressure from the FCA
The regulator – the Financial Conduct Authority (FCA) – has become increasingly vocal about its concerns regarding undervalued car claims. The FCA’s press release of 19th September 2025 spoke of its findings that sometimes insurers were making “automatic deductions” for pre-existing damage, even if the driver had been careful and their vehicle had no damage prior to the incident which wrote the vehicle off.
Within the notes of the press release, the FCA specifically mentions that Direct Line Group and Admiral have both either paid out compensation for undervalued car claims – or will be contacting customers to do so[4].

Which Insurers Have Paid Compensation for Undervalued Car Claims?

Allegiant Finance – who has been helping customers with undervalued car claims long before the FCA’s September 2025 press release – has found that the mistreatment of customers is much more widespread than the remedial action from Direct Line Group and Admiral.
Allegiant Finance is right now helping customers retrieve compensation for undervalued car claims. The following insurers have all provided compensation to our clients following Allegiant Finance’s intervention:

• Admiral
• Direct Line
• 1st Central Underwriting
• Ageas Insurance
• Covea Insurance
• Esure Insurance
• Hastings Direct
• Liverpool Victoria (LV=)
• RAC Insurance
• …and others…

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The Scale of Undervalued Car Claims

If the market, the Ombudsman and the regulator have moved, so has the scale of the issue: 562,185 vehicles were written off in 2024 – roughly one every 60 seconds – and more than 3 million since 2019. The year 2024 had the most write-offs within that six-year period[5].
It is also worth acknowledging the subjectivity inherent in valuation when dealing with undervalued car claims. Pre-accident value is not a single “objective” number; it is a triangulation across sources with differing methodologies and refresh cycles. That is precisely why the Ombudsman expects multiple guides to be consulted. The point is not to cherry pick; it is to avoid blind spots. Insisting on limited guides, or omitting certain guides because they may track higher is no longer defensible in light of the published approach.
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Are You Eligible for an Undervalued Car Claim?

If your insurer undervalued your car after a write-off, you may be entitled to compensation. For example:
• Your insurer valued your car at £6,000 but similar models on the market were selling for £8,000.
• You accepted an offer at the time but later discovered you were short-changed.
It’s time to turn the headlights to full beam on an issue of consumer detriment, and help those customers access justice against their insurance company.
Check if you’re eligible for an undervalued car claim.
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FAQs on Undervalued Car Claims

Can I claim if my insurer undervalued my car?
Yes. If your insurer’s payout was lower than the car’s true market value, you may have a valid undervalued car claim.
How long do I have to make an undervalued car claim?
Typically, claims can be made within six years of the payout. Many drivers who had cars written off between 2019–2025 may still be eligible.
Which insurers have paid compensation already?
Admiral, Direct Line, LV, Hastings Direct, Ageas and others have already compensated customers after undervaluing payouts.
What evidence do I need?
Car Registration, Insurance company and proof of ownership during the time of the write-off.

[1] Decision Reference DRN-4839406
[2]: What Percentage Can You Negotiate Off a Used Car in the UK?
[3] What’s happening with used car prices? — Autotrader Insight
[4]: Over 270,000 motorists to receive £200m in motor insurance compensation after insurers improve their claims processes | FCA
[5]: Eligible For A Vehicle Write Off Claim | Did Your Pay Out Fall Short?