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How to Settle a Car Accident Privately

settle car accident privately

While every driver is legally required to carry car insurance, drivers don’t always have to file a claim after an accident. Because of this, many drivers have a certain threshold of damage when they choose to file a claim. If you’re one of these drivers, then you may already have thought about what you must do to settle a car accident privately without the use of your auto insurance.

Typically, the most common accident to settle on your own is fender benders. This is an accident where the cars suffer damage while the drivers and passengers remain completely unharmed.

Every year, there are over four million fender benders reported to the police. Police reports are always required regardless of the severity of the accident. While not filing a claim with your insurance company can save you on premiums, it can leave you open for lawsuits if injuries are involved. That’s why it’s not only important to know how to settle a car accident on your own, but when you are able to. This post covers both.

Settling a Car Accident Without a Car Accident Claim

Let’s start out with the basics; you are involved in a fender bender and are thinking about handling it on your own. If you plan to not get your insurance involved, then you should do the following in order to resolve the settlement:

  • Documentation - Document everything about the accident, including photos of the cars involved and the location of the accident. It also helps to draft the settlement agreement that you both will sign in the future. At this point, though, no agreements are formally made.
  • Collect over driver’s information - When it comes to the other car involved in the fender bender, collect information about it, including plate number, make, model, and even color. Make sure you get the other driver’s contact information as well.
  • If you’re not at fault, file a police report - A police report may be required; if not, it is still best to have one. This will include documentation on the cars involved, like what you just collected. The fault of a driver is also determined here.
  • Shop around for repair providers - Since your insurance provider is unaware of the accident and won’t direct you to an auto shop, you have some freedom to be able to look around and find the one with the best deal.

Why Not File a Claim in a Car Accident With Little to no Damage?

When drivers don’t file a claim, their car insurance provider is unaware of the fender bender. This keeps them from raising your insurance premiums if you are found to be at fault for the accident.

Something that seems as minor as a fender bender can actually affect your premiums for a couple of years. Another reason not to file a claim is the cost of repairs is less than your deductible. But there are a lot of what-ifs when not filing a claim. For example, the other driver could have unseen injuries that they could sue you for later if you didn’t use your insurance.

How Can an Accident Affect Car Insurance Rates?

So, what kind of rate increases cause policyholders to stay silent to their insurance provider when some accidents occur? This answer varies by insurance provider and state they reside in.

California, Louisiana, Michigan, and Minnesota are known to have the highest premium increase for a car accident -even if it is the driver’s first. Meanwhile, Hawaii, New York, South Carolina, and Alaska are subject to the lowest.

Here is how some at-fault accidents, in particular, affect auto insurance rates. Say that your premium is the national average of $1,430:

  • Property damage under $2,000 - You can be looking at a 26% increase in your premiums after an accident like this, increasing your premium from $1,430 to $1,796.
  • Property damage over $2,000 - This results in a 32% premium increase, meaning you will be paying around $1,880 instead of the usual $1,430.
  • Bodily injury accident - When someone is hurt in an accident you cause, your rates can also rise by 32%.
  • Two property damage over $2,000 - After at least two accidents with property damage, your rates will start to reflect your driving with a 110% increase. That’s nearly $1,600 more you have to pay, adding up to a possible total of $3,002.

Getting Your Vehicle Repaired After a Private Settlement

After both yourself and the other driver(s) involved in the accident or fender bender agree not to file a claim with your respective insurers, you can begin looking for a place to have your car repaired.

You and the other driver(s) must agree not to get your insurers involved because if one finds out, then it’s likely that the other will too. As previously mentioned, you have much more freedom with the options of auto shops you can take your car to. You can pay for it yourself and then be reimbursed by the other driver if that is what was agreed upon, or they can provide payment for the repairs upfront.

That’s why it’s important to work these details out with the other driver and make sure they’ll comply. Of course, there’s also the possibility that the actual cost to repair is higher than the estimate. You won’t be penalized if you decide to get insurance involved at the last minute.

Moving on After a Car Accident is Settled Privately

Once the repairs are done, there is one more small matter to tend to. You and the at-fault driver have to fill out what is known as a “paying out of pocket for a car accident” form. This officially ends the whole ordeal, and neither driver can pursue or request more money later on. This also protects the at-fault driver if you discover you have injuries or vice-versa.

The Pros And Cons of Privately Settling a Car Accident

Let’s review everything we gathered from settling a car accident on your own -both the good and the bad.

Here’s why settling privately can be good:

  • Premiums don’t increase - Since you’re paying out of pocket if you’re at fault or agreed not to file a claim with your insurance provider, your auto rates will remain unchanged.
  • Don’t have a claims process - The insurance claims process can take months, while you can arrange a deadline of your own with the other driver(s) involved in the fender bender. You can have the whole thing resolved much faster.
  • No auto shop restrictions - Your auto insurer will naturally not be there to direct you to an approved auto shop for repairs. So, you have much more freedom in picking where you want to get your car fixed. A good rule of thumb is to get at least three estimates from different auto shops.

Here are some risks you run when opting to settle a car accident without insurance:

  • May not get your damage covered - This would be the case if another driver is at fault. There’s always the risk of them flaking on you, so you want to get their contact information like phone number and address. A photo of their ID can also help.
  • Can be sued due to injuries - Accidents wherein someone was injured shouldn’t be privately settled because if you are at fault and the driver you hit later reports an injury from the accident, they can sue you. That’s why minor fender benders are the only time where you can really settle the damages on your own.

Even if you have a driving record with some blemishes, you still need auto insurance, and that’s where Insurance Navy can help. Call 888-949-6289 or request an SR-22 quote online today. Quotes are offered at no cost to you. Need further assistance? Stop in at one of our conveniently-located storefronts.

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