Direct Line will pay drivers compensation after admitting it underpaid some customers whose vehicles had been written off.
This meant some customers did not receive as big of a payout then they should've done.
The Financial Conduct Authority (FCA) issued a notice this week saying Direct Line "must carry out" a review of the total losses of vehicles between September 2017 and August 2022.
Specifically, Direct Line will be looking at cases between September 1, 2017, and August 19, 2022.
In a notice on its website, Direct Line said it was working to identify “everyone affected” by underpayments.
However, the insurer noted that only a "minority" of customers will receive compensation as the "vast majority of customers will not be impacted.
The firm, which has over five million customers, has said that people don't need to take any action and anyone affected will be contacted directly.
Affected customers will receive compensation plus interest from Direct Line however, the firm has not confirmed when it will be paid to customers - or how much the average payout could be.
A Direct Line Group spokesperson: “We are reviewing Motor Total Loss Claims settled between 1 Sept 2017 and 17 Aug 2022 to identify any car insurance customers who received an unfair settlement during this period.
"We expect that this will affect a minority of customers and the vast majority of customers will not be impacted.
"Customers do not need to contact us, either directly or via third parties, as we will contact impacted individuals to apologise and provide appropriate redress, including interest.”
Last December, the financial regulator found evidence that some drivers who had their cars written off after an accident were being offered less than their vehicle's market value.
In some cases, the FCA found that insurers were only offering customers an increased amount when they claimed.
At the time, Sheldon Mills, executive director for consumers and competition at the FCA said: "When making an insurance claim, people shouldn’t need to question whether they are being offered the right amount for their written-off car or other goods that they need to replace.
"Insurance firms should offer settlements at the fair market value.
"This is especially important now as people struggling with the cost of living will be hit in the pocket at precisely the time they can ill afford it.”
