I was involved in an accident last weekend, when the car behind's brakes failed and ploughed into the back of me. The other party has accepted full liability (and is fully insured) and my insurance company has been informed of this.

My insurance company has said that it is unwilling to repair my car, due to previous repairs being unsatisfactory, so has offered me cash in lieu as a goodwill gesture, instead of writing off my car, which would be a smaller sum. It has also said it will not cover the cost of a hire car as my car will then not be repaired by an approved garage.

I don't know if the sum offered is enough to cover the cost of the repairs needed. The terms and conditions of my policy make no mention of the cash in lieu proposal, so this situation is very confusing. Especially as I understood that I would be entitled to a hire car whilst my car was being repaired. Is this a common solution for insurance companies?

If I don't accept the offer I will receive less by way of write-off value. I bought the car second hand 18months ago, and will not be able to afford to buy another with the amount the insurance company are offering. Why is it that although I am not at fault for the accident, and despite paying insurance I will be left without a means of transport? Am I able to sue the other driver for compensation to remediate the situation?

I would greatly appreciate some advice as this situation is very confusing.