Groupama is breaking the motor insurance mould by replacing written off cars rather than offering cash settlements.

It has signed up Bournemouth-based One Stop Car Shop to find replacement vehicles at the cash price the insurer offers. One Stop inspects the vehicle, spruces it up and supplies it with a three-month breakdown warranty.

One Stop, which is opening up stores in Chiswick and the City and will roll out other stores across the country, also offers the claimant the chance to upgrade, including offering finance through Capital Bank, the specialist finance arm of Royal Bank of Scotland.

Under the deal Groupama will also give claimants a hire car until their replacement vehicle is found.

The company has carried out a pilot, replacing about 40 vehicles ranging from cars over ten-years old and worth as little at £2,000 to more modern cars worth £20,000. Groupama has not set maximum age for cars it will replace. If One Stop can find a similar car, the deal applies.

Hugo Mackenzie Smith, One Stop's MD, said: “If you say to people, ‘that's the value and we'll send you the cheque,' they tend to say ‘hang on!' But if you say: ‘Here are the sorts of car you can have, which would you like?', they are much happier.” He also said most people chose to upgrade.

Groupama said it was aimed at giving better customer service levels to write-off claimants, who are currently “abandoned” by insurers.