Car Insurance Claims Hit £3.2bn as Repair Costs Rise

 

Why modern cars are becoming so expensive to repair

 

Modern cars are packed with technology designed to make driving safer. Cameras watch the road ahead, radar can detect vehicles around us, parking sensors warn about obstacles and increasingly sophisticated headlights adapt to changing conditions.

 

The downside becomes apparent when something goes wrong.

 

Motor insurers paid out a record £3.2 billion in claims during the second quarter of 2026, according to the Association of British Insurers (ABI). That was 5% more than during the previous quarter and 7% higher than the same period in 2025.

 

The average claim payout increased by 4% in just three months to £4,900.

 

Perhaps more surprisingly, this has happened while the cost of insurance itself has been relatively stable. The average motor premium increased by only £6 during the quarter to £566. Adjusted for inflation, that was actually £14 lower than the same quarter in 2025.

 

The ABI points to one of the main reasons for that contrast: cars are becoming increasingly expensive to repair.

 

A relatively modest collision can now damage cameras, sensors, electronic modules and other components that simply did not exist on many cars a decade or two ago. Repairing the visible damage can be only part of the job.

 

And as those costs rise, there is another consequence for motorists. A car does not have to be smashed beyond recognition to be written off.

 

Sometimes it simply becomes too expensive to repair.

 

Repair costs have risen sharply

 

The latest quarterly figures are not an isolated spike.

 

Thatcham Research, the organisation specialising in vehicle safety, security and repair, reported earlier in 2026 that the average cost of repairing a vehicle following a collision increased by 50% between 2019 and 2024.

 

It attributed much of that increase to technological development and the specialist skills needed to repair modern cars safely.

 

ABI figures tell a similar story. During 2025, insurers paid almost £7.5 billion for vehicle damage claims, including accidental damage, third-party vehicle damage and windscreen repairs. That represented around 63% of all motor claims payouts during the year.

 

In the first quarter of 2026 alone, insurers paid £1.9 billion for vehicle repairs.

 

The average accidental-damage claim reached £3,699 during that quarter, 8% higher than three months earlier.

 

That £3,699 figure covers accidental damage on its own. Looking across all private motor claims, the average payout then climbed to £4,900 in the second quarter.

 

A modern bumper is not necessarily just a bumper

 

It is easy to look at a low-speed accident and assume the repair should be straightforward.

 

A damaged bumper might once have involved repairing or replacing a relatively simple moulded panel.

 

On a modern vehicle, equipment fitted in or behind that same area can include parking sensors, radar equipment, cameras, wiring, control modules and components used by systems such as adaptive cruise control, automatic emergency braking and blind-spot monitoring.

 

The outer panel may therefore represent only part of the repair.

 

Components may need replacing or testing, wiring may need checking and driver-assistance systems may need recalibrating before the vehicle can safely return to the road.

 

Thatcham Research now specifically considers ADAS sensor positioning, parts availability, tooling, technician capability and calibration requirements when assessing how repairable a vehicle is.

 

Importantly, it says repairability can directly affect both the cost and duration of a repair and the likelihood of a vehicle becoming a total loss.

 

Headlights have changed too

 

The same change has happened at the front of the car.

 

For years, replacing a damaged headlight could mean little more than fitting a lamp unit and replacing a bulb.

 

Many modern cars now use LED, matrix LED or adaptive lighting systems containing electronics and control equipment within the complete headlight assembly.

 

Earlier Thatcham research identified increasingly sophisticated headlamps as one of the major challenges facing vehicle repairers, noting that modern units can cost considerably more than conventional headlights and may have to be replaced rather than repaired.

 

This matters because headlights sit in one of the areas most likely to be affected in a front-end collision.

 

A relatively modest impact can therefore result in a surprisingly expensive parts bill before the bumper, bonnet, wing, grille or any equipment behind them has been considered.

 

Even replacing a windscreen can involve more than replacing glass

 

The ABI reported another striking figure in its latest data.

 

The average cost of a windscreen claim increased by 7% during the second quarter of 2026 to £283.

 

One reason is that a modern windscreen can form part of the car's safety and driver-assistance systems.

 

Forward-facing cameras are commonly mounted around the top of the windscreen and can be used by lane-departure warning, lane-keeping assistance, traffic-sign recognition and automatic emergency-braking systems.

 

Replacing the glass can therefore require more than simply removing one screen and fitting another.

 

Depending on the vehicle and manufacturer's repair requirements, a camera or other sensor may need to be recalibrated afterwards.

 

Heated elements, aerials, acoustic glass and other equipment can add further cost.

 

What is ADAS recalibration?

 

ADAS stands for Advanced Driver Assistance Systems.

 

These systems use cameras, radar, lidar and ultrasonic sensors to understand what is happening around the vehicle.

 

For them to work properly, some sensors need to know very precisely where they are pointing.

 

A repair can affect that alignment.

 

Thatcham Research identifies links between ADAS calibration and work involving windscreens, suspension, wheel alignment and vehicle body structures. Its specialist training for repairers includes diagnostics, fault-code reading, wheel alignment and calibration of optical, radar, lidar and ultrasonic sensors.

 

That means accident repair increasingly involves work that goes well beyond removing a damaged panel and fitting a replacement.

 

A repaired car also has to leave the bodyshop with its safety systems functioning as the manufacturer intended.

 

More complicated materials require different repair methods

 

Technology is not the only issue.

 

Cars themselves are increasingly constructed from mixtures of high-strength steels, aluminium, composites and other materials intended to reduce weight while maintaining structural strength.

 

Different materials can require different repair methods, tools and expertise.

 

Thatcham has previously highlighted aluminium in particular as a material that can make some repairs more difficult because it can be harder to reshape than conventional steel. In some cases, repairing part of a panel may no longer be appropriate and a larger component has to be replaced.

 

Modern crash structures are also deliberately designed to absorb energy during an impact.

 

That is good for occupant safety, but it can mean parts hidden behind the visible bodywork have also been damaged.

 

A repair estimate made before a vehicle is stripped down may therefore increase once the true extent of the damage becomes apparent.

 

There is also a shortage of specialist repair skills

 

The people needed to carry out these repairs are becoming increasingly specialised.

 

In research published in February 2026, Thatcham Research said 73% of repair and salvage professionals surveyed regarded the widening skills gap as a growing challenge for the industry.

 

The problem is particularly relevant to electric vehicles and cars fitted with sophisticated driver-assistance equipment.

 

A shortage of suitable technicians does not simply affect labour rates. It can also affect how long a vehicle remains off the road.

 

And repair time itself can add to the overall cost of an insurance claim.

 

Parts delays can make an accident more expensive

 

The cost of repairing a vehicle is not necessarily limited to what eventually appears on the bodyshop invoice.

 

The ABI has highlighted rising parts prices and longer repair times, including delays caused by supply-chain disruption.

 

If a vehicle waits several weeks for a component, associated costs can continue to accumulate.

 

Depending on the circumstances and insurance arrangements, these can include recovery, storage and the provision of a temporary replacement or courtesy vehicle.

 

This leads to an important distinction between whether a car can be repaired and whether repairing it makes financial sense.

 

A repairable car can still be written off

 

Many drivers assume a written-off car must be so badly damaged that it cannot safely be repaired.

 

That is not always the case.

 

The ABI explains that a vehicle can become what is known as an economic total loss.

 

A vehicle may be perfectly capable of being repaired, but the expected cost of doing so can become too high compared with what the vehicle was worth immediately before the accident.

 

Associated expenses can also affect that decision. The ABI specifically gives the cost of providing a courtesy car as an example of an additional expense that can contribute to a vehicle becoming an economic total loss.

 

Thatcham Research similarly says vehicle repairability affects the likelihood of total loss as well as repair cost and repair time.

 

So two cars suffering visually similar damage can have very different outcomes.

 

One might be repaired. The other might be written off because its lower market value, more expensive parts, more complicated construction or higher associated repair costs make the economics different.

 

Is there a fixed percentage at which a car is written off?

 

You will often see claims that insurers automatically write off a vehicle when repairs reach 60%, 65% or 70% of its value.

 

There is no single statutory percentage that applies to every motor insurer and every claim.

 

The Financial Ombudsman Service says industry practice is for insurers to consider writing off a vehicle when repair costs are around 60% to 70% of its pre-accident value. That is not an automatic threshold, though, and the circumstances of each claim still matter.

 

An insurer has to consider the economics of the individual claim.

 

The relevant factors can include the pre-accident market value, likely repair cost, potential hidden damage, salvage value, repair duration and associated claims expenses.

 

That explains why an insurer may sometimes decide that a vehicle is a total loss even where the headline repair estimate is below its market value.

 

A simple example

 

Imagine a car with a pre-accident market value of £8,000, where a repairer estimates that visible accident damage will cost £5,000 to put right.

 

Pre-accident market value	£8,000
Estimated repair cost	£5,000

 

The car could physically be repaired for that amount, so at first glance it might seem obvious that repairing it is cheaper than paying its £8,000 market value.

 

But the insurer also has to consider whether further damage is likely to be discovered, how much the damaged vehicle could be sold for as salvage, how long the repair will take and what other claims costs may arise during that period.

 

If those figures make a total-loss settlement cheaper overall, the insurer may decide not to repair the vehicle.

 

This example is deliberately simplified. Insurers use their own processes and each claim will depend on its individual circumstances.

 

Older cars can therefore, be written off surprisingly easily

 

This is one reason older vehicles can be declared total losses after an accident that does not initially appear particularly severe.

 

The cost of parts, paint, labour and diagnostic work does not fall simply because the car has depreciated.

 

Its market value does.

 

A repair costing £5,000 is far easier to justify on a car worth £30,000 than on one worth £6,000.

 

As a vehicle gets older and its market value falls, the gap between repair cost and vehicle value becomes progressively smaller.

 

That does not mean newer cars are immune, however.

 

Why newer and more expensive cars can still be written off

 

A newer vehicle starts from a higher market value, but it can also carry much more expensive technology.

 

Damage involving multiple ADAS sensors, lighting systems, structural components or complex electronics can quickly increase the repair bill.

 

Electric vehicles introduce another potential issue: the high-voltage battery.

 

Thatcham Research has spent several years warning that battery assessment and repairability can materially affect whether an electric vehicle is economically repairable.

 

In March 2026, it launched an Electric Vehicle Blueprint aimed specifically at preventing unnecessary EV write-offs.

 

Thatcham said a battery can represent around 40% of an electric car's total value and argued that better battery repair and diagnostic processes could help keep more vehicles on the road rather than replacing an entire battery assembly after damage.

 

This does not mean a damaged electric car will automatically be written off. It does show how a single high-value component can substantially change the economics of a repair.

 

What happens when an insurer declares a car a total loss?

 

For most standard comprehensive motor policies, the starting point is the vehicle's market value immediately before the accident or loss.

 

The Financial Ombudsman Service describes market value as what the vehicle would have been worth just before it was damaged or stolen.

 

When considering complaints about valuations, the Ombudsman looks at specialist motor valuation guides alongside other relevant evidence. It can also consider comparable advertisements, particularly where values in the guides differ or additional evidence is needed.

 

Mileage, registration year, condition and vehicle specification can all affect the result.

 

The figure entered by a policyholder as the vehicle's estimated value when buying motor insurance is not necessarily the amount the insurer will pay after a total loss.

 

Any applicable motor-insurance excess or other valid policy deductions may also affect the final amount received.

 

What if you think the insurer's valuation is too low?

 

A total-loss decision and the value placed on the vehicle are separate issues.

 

You might accept that the car is uneconomic to repair but disagree with what the insurer says it was worth immediately before the accident.

 

Check that the valuation uses the correct model, trim, age, mileage and specification.

 

If you find comparable cars advertised for substantially more, make sure they are genuinely similar. The Financial Ombudsman points out that differences in mileage or registration year can make a large difference to the value of otherwise similar models.

 

If you believe the valuation is wrong, raise the issue with the motor insurer and provide supporting evidence.

 

Where does GAP insurance fit?

 

Rising repair costs do not directly determine the amount payable under a GAP insurance policy.

 

They can, however, affect whether the motor insurer decides to repair the vehicle or treat it as a total loss in the first place.

 

Once a total loss has occurred, the motor insurer will normally settle on the basis set out in the motor policy, commonly the vehicle's market value.

 

That amount may be lower than the price originally paid for the car.

 

Return to Invoice GAP is designed to cover an eligible difference between the motor insurer's settlement and the vehicle's eligible invoice purchase price, subject to the policy wording, limits and exclusions.

 

Vehicle Replacement Insurance uses a different benchmark and can be based on the cost of an equivalent replacement vehicle matching the original vehicle's age, mileage and specification when purchased, again subject to the individual policy terms.

 

GAP insurance is separate from comprehensive motor insurance and does not determine whether the vehicle is repaired or written off. That decision remains with the motor insurer.

 

What should you do if your car is involved in an accident?

 

Do not assume that the amount of visible damage tells you whether the vehicle will be repaired.

 

Report the accident promptly and allow the insurer or repairer to assess the complete damage.

 

If the car is declared a total loss, check the valuation carefully and make sure the vehicle details used are correct.

 

Keep your purchase invoice, finance agreement and other documentation relating to the vehicle. If you have GAP insurance, contact the GAP provider once the motor insurer has confirmed the total loss and follow the claims process set out in the policy.

 

It is also sensible to speak to the GAP insurer before agreeing or challenging a final motor-insurance settlement where the GAP policy requires this.

 

Safer cars can still be more expensive cars to repair

 

The technology fitted to modern vehicles has brought genuine safety benefits.

 

Automatic emergency braking can help prevent collisions. Cameras and sensors can warn drivers about hazards they may not have seen. Modern vehicle structures are designed to protect occupants far more effectively than those of previous generations.

 

But the same technology has changed the economics of accident repair.

 

The ABI's record £3.2 billion quarterly claims bill and £4,900 average claim payout show that repair costs remain under considerable pressure even while insurance premiums themselves have become relatively stable.

 

A bumper may contain sensors. A windscreen may carry a camera. A headlight can contain sophisticated electronics. Repairs may require diagnostics, calibration, specialist tooling and technicians trained to work with increasingly complicated vehicles.

 

That means a car can be physically repairable yet still become an economic total loss.

 

For motorists, the important distinction is simple: an insurance write-off does not necessarily mean a car cannot be repaired. Sometimes it means that, once every part of the claim is taken into account, repairing it no longer makes financial sense.

 

Sources and further reading

• Association of British Insurers, Record £3.2 billion paid out to support motor insurance customers in Q2 2026, 30 July 2026.
• Association of British Insurers, £11.9 billion paid out in 2025 to support motorists across 2.5 million claims, 11 February 2026.
• Association of British Insurers, Motor premiums remain stable, but cost of repairs still high (Q1 2026 data), 30 April 2026.
• Thatcham Research, Thatcham Research reports critical skills shortage in UK vehicle repair sector, February 2026.
• Thatcham Research, Electric Vehicle Blueprint could prevent growing numbers of unnecessary write-offs, 3 March 2026.
• Financial Ombudsman Service, Vehicle valuations and write-offs.
• Financial Ombudsman Service, Vehicle repairs.