Manchester Council alone spent £1.16m settling claims brought about by unsafe road surfaces, more than double the next closest council pay out.
The biggest single payout - by St Helens Council - was almost £200,000, made to a cyclist who suffered multiple injuries in a crash caused when they hit a pothole.
Take a look inside this stunning five bed barn conversion on sale in East Boldon
South Shields dad furious after South Tyneside Homes removes turf and trellises over 'fire hazard' concerns
These are the top 20 happiest places to live in Britain
Pandemic cuts South Tyne private hire fleet
Use these six quick ways to get your garden looking good in a heatwave
The figures were uncovered by a Freedom of Information request from online marketplace Heycar and revealed that behind Manchester, Derbyshire and Essex councils paid out the most in compensation, spending £500,965 and £472,164 respectively between April 2019 and March 2020. The data didn’t cover council areas in Scotland, Wales or Northern Ireland.
In total, local authorities in England spent £8.3m compensating drivers for damage to their vehicles, as well as paying out for injuries suffered by road users who hit potholes.
The study also looked at how much it costs councils to fix potholes, revealing huge differences around the country. While the average repair cost was around £80, the amount spent by individual councils ranged from £18 in Torbay to £398 in Bexley.
It also revealed some of the most serious claims and payouts made by individual councils.
As well as the cyclist who received nearly £200,000 after being seriously injured in a crash on the A49, other major claims included £20,500 paid out by Brent council in London to a motorcyclist knocked from their bike after hitting a pothole, and a £4,500 payout by Greenwich Council to a driver who crashed their car after hitting a pothole.
The RAC has said Britain’s roads are in a “desperate state” and earlier this year reported a record increase in the number of pothole-related call-outs. Between January and March 2021 the recovery service attended 4,694 pothole-related problems, up from 1,461 in the previous quarter year.
Dan Powell, senior editor at heycar, said: “Potholes are such a familiar sight, and I’m sure everyone will have a top ‘worst road’ in their area that comes to mind when potholes are mentioned - but they’re much more than just an inconvenience.
“They’re causing real damage to people and their vehicles and the rate at which potholes are appearing is too fast for councils to keep up with. So even more claims will be coming, further reducing the funds available for road repairs.
“Driving should be a feelgood experience, especially after the restrictions of the past year. However, poorly maintained roads only lead to concern and frustration. The pothole crisis only appears to be getting worse, and more funds need to be allocated to help councils fill them quicker.”