Hats off to Groupama. It has decided to replace written-off cars rather than just offer cash settlements. Although this has long been policy among insurers for brand new cars written off in the first few months, Groupama is extending the idea to older models.

The insurer says it is “improving service standards to the policyholder,” and it really means it. One of the most common complaints heard about motor insurance is that the claimant cannot afford to buy an adequate replacement car with the cash settlement offered – which is virtually always lower than the value for which the car is insured.

Insurers have legitimately argued that by shopping around the claimant could get a car for that price. But a claimant would have to spend many hours shopping about and then spend cash getting potential purchases inspected and tested.

Insurers have said that by offering extra to cover these costs they would be putting the insured in a better position than before the write-off.

Replacing other items has become standard insurance practice, but replacing cars that are perhaps up to ten years old has always been seen as too risky or expensive. The result has been a kick in the teeth for the consumer.

But ask anyone who has written off their car and been paid a cheque they felt was inadequate and they will tell you their low opinion of the insurance industry as a whole.

Groupama is tackling that too. Its efforts to provide drivers with the same service standards householders have come to expect are to be applauded.

The rest of the industry should follow Groupama's lead.