Who pays what on an insurance repair
On an insurance repair the insurer pays the cost of the repair less the policy's excess, and the customer pays the excess. The excess can be bigger than customers expect: some policies add an extra excess when the customer uses their own repairer instead of the insurer's. In one Aviva policy the Financial Ombudsman looked at, that was £500 on top of a £150 excess.
Tell the customer what they'll owe when they agree to the repair, not when they come to collect. Retail work is simpler: the customer owes what they agreed in your quote, plus any extra work they authorised. Our quote guide covers getting that agreement right.
Free toolBodyshop invoice templateA free invoice for repair work, with VAT and your payment details, and the excess shown on insurance jobs.VAT on insurance repairs
VAT is where insurance jobs most often go wrong. HMRC's position is that the repair is supplied to the policyholder, even when the insurer pays you directly. The insurer can't reclaim the VAT. A VAT-registered policyholder can, so the insurer normally pays them, or you, only the net amount, less the excess. For motor repairs a business policyholder can reclaim all the VAT even if the car has some private use.
The insurer's claim form asks whether the policyholder is VAT-registered, and that answer decides who pays you the VAT. Here's how it works on a made-up repair of £2,000 plus £400 VAT, with a £250 excess:
| Policyholder | Insurer pays | Customer pays | You receive |
|---|---|---|---|
| Not VAT-registered | £2,150 | £250 excess | £2,400 |
| VAT-registered | £1,750 | £650: the £250 excess and £400 VAT, which they reclaim | £2,400 |
An illustration built from HMRC's VIT13500 and Notice 701/36. Either way you account for £400 of output VAT on the repair.
Some policies exclude VAT altogether. In a 2025 decision the Financial Ombudsman accepted that an insurer could leave VAT out where it could assume a VAT-registered policyholder would reclaim it. Either way, the customer owes you any VAT the insurer doesn't pay, so collect it with the excess.
Holding the car: the repairer's lien
Under the common law, a repairer has a lien: the right to keep a car until it's paid for the work. Citizens Advice tells customers that a garage may keep the car while the bill is disputed, but mustn't sell or get rid of it during the dispute. Once the car has left your premises, so has your strongest way of getting paid.
Storage charges
Storage charges only work if the customer agreed them in advance. The Motor Ombudsman's code, which binds its accredited garages, requires storage fees and other extra charges to be disclosed before work starts. Two more points from the law:
- Holding a car under a lien isn't storage. Solicitors' commentary on Morris v Beaconsfield Motors (2001) says that without a term in the contract, you can't charge for storage while you keep the car under your lien.
- Keep the charge fair. The CMA lists excessive storage charges when a consumer fails to collect as likely to be unfair, and an unfair term doesn't bind the customer.
- On insurance jobs, check the authorisation. Allianz's note says whether it authorises storage or recovery the car arrived with.
Put your daily storage rate, and when it starts, on your quote and your terms, and tell the customer in writing the day the car is ready.
Cars nobody collects
In England, Wales and Northern Ireland, the Torts (Interference with Goods) Act 1977 sets out how you can sell goods, a car included, that nobody collects:
- 1
Send a notice to collect
In writing, delivered, left at the address or posted, at any time after the repair. It gives your name and address, the car and where it is, that it's ready, and the amount due. - 2
Send a notice of intention to sell
By registered post or recorded delivery. It gives the date on or after which you'll sell and the amount due, and allows a reasonable chance to collect: at least three months when money is owed. - 3
Check there's no dispute and who owns the car
You can't give notice or sell while the customer disputes the bill. Be reasonably satisfied the customer owns the car: a sale doesn't give good title against the true owner, such as a finance company. - 4
Sell it the best way available
From the proceeds you can keep the costs of the sale and what was owed before the notice. A court can also authorise a sale.
Trading Standards' Business Companion says a visible notice may sometimes be enough, but the Act is stricter, so follow the Act. It doesn't apply in Scotland, where there's no statutory power of sale and the common law applies; get Scottish legal advice before selling a car there.
Chasing what's owed
When the car has gone and the bill hasn't been paid, put it in writing first. What comes next depends on who owes you.
Business customers: late payment interest
On a debt from a business customer, such as a fleet, a dealer or a trade customer, you can claim statutory interest at 8% above the Bank of England base rate, plus fixed compensation: £40 on a debt under £1,000, £70 on £1,000 to £9,999.99, and £100 on £10,000 or more. Base rate has been 3.75% since 18 December 2025, so the rate is 11.75% for interest that started running in 2026. With no agreed date, payment is late 30 days after your invoice or the work, whichever is later. You can't claim statutory interest if your contract sets a different rate, and none of this applies to private customers.
Private customers and sole traders: the debt protocol
Before suing an individual, including a sole trader, follow the Pre-Action Protocol for Debt Claims. Send a letter of claim by post with the amount, a statement of account, the protocol's information sheet, reply form and financial statement. The debtor has 30 days to reply, and you give 14 days' notice before issuing a claim.
Small claims
| Where | How it works |
|---|---|
| England and Wales | The small claims track covers claims up to £10,000. Disputed claims go to a free, compulsory phone mediation of up to an hour first. Money Claim Online takes claims up to £99,999.99 |
| Scotland | Simple procedure for claims of £5,000 or less, made through Civil Online |
| Northern Ireland | The small claims court for claims up to £5,000; the county court takes claims up to £30,000 |
| Claim, with interest | Issue fee | Hearing fee |
|---|---|---|
| Up to £300 | £35 | £27 |
| £300.01 to £500 | £50 | £59 |
| £500.01 to £1,000 | £70 | £85 |
| £1,000.01 to £1,500 | £80 | £123 |
| £1,500.01 to £3,000 | £115 | £181 |
| £3,000.01 to £5,000 | £205 | £346 |
| £5,000.01 to £10,000 | £455 | £346 |
From HMCTS's fees list (EX50), updated 13 July 2026. We didn't confirm the fees in Scotland or Northern Ireland.
Credit repair and accident management work
On non-fault claims, an accident management or credit repair company may send you the car and pay you, recovering the cost from the at-fault driver's insurer. The customer pays no excess. The Financial Ombudsman explains that the customer signs an unregulated credit agreement and may have to help recover the costs, or pay them if they can't be recovered; the CMA found these firms rarely pursue customers.
GuideAccident management companies and credit hireHow non-fault work reaches bodyshops, how it's paid, and what to check before you take it.Habits that get you paid
- Get the customer's agreement to your quote, your storage rate and your terms before you start.
- On insurance jobs, wait for the authorisation and read it: the excess, the VAT status and the invoicing instructions.
- Get every supplementary authorised before the extra work, with photos.
- Invoice what was authorised, the day the work is done.
- Collect the excess and any VAT the insurer won't pay before the keys go back.
- Have the customer sign a satisfaction note at collection.
- Chase in writing, and follow the debt protocol before going to court.
