Automotive

Private Accident Settlement, What should I know?

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[OP]
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Sep 1, 2005
418 posts
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Private Accident Settlement, What should I know?

I got into a minor fender bender with another vehicle, since I slid into the other car and cracked his bumper, it was my fault. The other driver is willing to avoid going through insurance and let me pay cash for the repair. The damage is basically cosmetic, probably under $2000, so no police report/tag is required. He's driving an older Ford, and I'm thinking it will be around $1000 (?) to replace the bumper and I'm guessing he will probably just pocket the money. I don't mind paying out since it will be worth it to keep my insurance premiums from going up. My question is, is there anything I need to do or watch out for, other than having him sign a receipt for the cash and a statement to release me from further obligations?
20 replies
Deal Addict
Aug 27, 2011
3048 posts
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Toronto
Do know that the statement that you will have the other driver sign is only legally enforceable between you and the other driver. IE, if the other driver decides to go through insurance, your only recourse is small claims court.
[OP]
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Sep 1, 2005
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Couldn't I add a clause that the other driver will hold my insurer harmless and gives up the right to claim any damages once he is paid? So if he does try to go through insurance, I can give the statement to my insurer and cancel his claim?
Deal Addict
Jan 8, 2006
1628 posts
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I did this few years ago... keep in mind that in settlement letter don't mention your fault. You simply state you are paying x amount for damages. Also add clause in future neither party will go to their insurance company for any claims related to this accident. Google a bit you might find sample letter.

$1000 sound bit too much to it. Can't you go to few auto body shop and see how much going to cost it and just pay the cash amount? It it's not so high impact it might be just bumper cover is cracked and it's around $200+ and replacing and painting should be less than $1000.
Deal Addict
Aug 27, 2011
3048 posts
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Toronto
Advantage22 wrote: Couldn't I add a clause that the other driver will hold my insurer harmless and gives up the right to claim any damages once he is paid? So if he does try to go through insurance, I can give the statement to my insurer and cancel his claim?
Nope. You can't legally remove his/her right to access benefits that are due onto him as the contract is not between you and their insurance company.
Deal Expert
Aug 22, 2011
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Center of Universe
If it's your first at fault and you have accident forgiveness and not planning to switch insurers; I suggest you tell the driver to put the claim through.
Deal Addict
Feb 20, 2014
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Be careful if you decide to settle privately. Having him sign a contract that you get off of Google won't prevent him from making a claim through his insurance company. Whenever you settle privately, you have to understand that you're taking a huge risk and trusting a complete stranger to not report it. Many people have been f'd over before doing this... they paid cash and then ended up having an at-fault claim on their record anyway.
Deal Addict
Dec 9, 2003
4997 posts
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Calgary
Every time this question comes up, the conservatives say "don't trust him" "make a claim"

Unless you have reason to mistrust him, then make a sensible decision. I have hit people and settled for small cash; I have been hit and settled for small cash. With no subsequent issues. Yes, get a piece of paper signed that this is his full claim, and he wont put it through to his insurance, and that both of you understand there are no medical concerns. Even if this later went to court, there is a big likelihood that the judge would declare that there is no subsequent case.

Take a worst case - that he says a month later he broke his neck, makes a claim through his insurance to your insurance. You have lost nothing - even the $1000 you paid would be credited against the claim.
Deal Expert
Aug 22, 2011
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Cough wrote: Every time this question comes up, the conservatives say "don't trust him" "make a claim"

Unless you have reason to mistrust him, then make a sensible decision. I have hit people and settled for small cash; I have been hit and settled for small cash. With no subsequent issues. Yes, get a piece of paper signed that this is his full claim, and he wont put it through to his insurance, and that both of you understand there are no medical concerns. Even if this later went to court, there is a big likelihood that the judge would declare that there is no subsequent case.

Take a worst case - that he says a month later he broke his neck, makes a claim through his insurance to your insurance. You have lost nothing - even the $1000 you paid would be credited against the claim.
Please do share the source where a private cash settlement will be credited, should the other party make a claim??????????
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Jun 26, 2011
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Cough wrote: Yes, get a piece of paper signed that this is his full claim, and he wont put it through to his insurance, and that both of you understand there are no medical concerns. Even if this later went to court, there is a big likelihood that the judge would declare that there is no subsequent case.

Take a worst case - that he says a month later he broke his neck, makes a claim through his insurance to your insurance. You have lost nothing - even the $1000 you paid would be credited against the claim.
That's not actually correct.

The piece of paper OP signs with the third party is between them. The piece of paper can say he will not go after OP for the damages or injuries. That only means he cannot sue the OP. It does not stop them at all from making a claim to their insurance. In Ontario people claim directly to their own insurance only, OP's insurance will not have to pay anything but will get notified that there's an at-fault claim. The little piece of paper he has sign has no legal effect to cancel that claim.
Deal Addict
Dec 9, 2003
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I love all this legalistic stuff. Could someone actually describe their personal experience where this has gone wrong. I have shared my experiences where it has gone right. Of course there are scammers and cases where something became apparent after the fact. But show me a personal case where anyone has personally suffered at the end.

I didn't say the piece of paper is completely watertight. But, believe it or not, most judges and insurance adjusters are not unreasonable if a satisfactory level of diligence has been applied.
Deal Expert
Aug 22, 2011
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Cough wrote: I love all this legalistic stuff. Could someone actually describe their personal experience where this has gone wrong. I have shared my experiences where it has gone right. Of course there are scammers and cases where something became apparent after the fact. But show me a personal case where anyone has personally suffered at the end.

I didn't say the piece of paper is completely watertight. But, believe it or not, most judges and insurance adjusters are not unreasonable if a satisfactory level of diligence has been applied.
Do a search here in RFD and you will see several posts of those who got the shaft!
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Jul 5, 2004
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vkizzle wrote: If it's your first at fault and you have accident forgiveness and not planning to switch insurers; I suggest you tell the driver to put the claim through.
Accident forgiveness is meaningless if your premiums rise in the future and you want to look at changing insurance companies. You will be stuck with your current insurance company for the next 6 years regardless of how much they increase the premiums. It's easy to think you won't change insurers, but you just don't know what will happen 3 years down the road.

The risk of him taking that $1,000 and then going through insurance is slim to none. It's not worth it for him to do that, not over such a small amount of money. Still, have him sign a release document anyway. It doesn't stop him from going through insurance, but it would mean he'd have to pay back that $1,000 if you took him to court. He could also owe you court costs and any other expenses. It doesn't make sense for him to do that.
Deal Addict
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Jun 26, 2011
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Cough wrote: I love all this legalistic stuff. Could someone actually describe their personal experience where this has gone wrong. I have shared my experiences where it has gone right. Of course there are scammers and cases where something became apparent after the fact. But show me a personal case where anyone has personally suffered at the end.

I didn't say the piece of paper is completely watertight. But, believe it or not, most judges and insurance adjusters are not unreasonable if a satisfactory level of diligence has been applied.
I understand that from your personal experience it has worked out for you. Many others who are from the industry have also confirmed that piece of paper means nothing. Believe it or not, insurance adjusters encounter these scenarios often (where they are notified of an at-fault claim and the client pulls out a piece of paper saying the other party promised they won't claim insurance) and they don't care. The $1000 OP claims will also certainly not be credited against the claim if claimed through insurance.

The piece of paper usually just acts to scare the other party into not making a claim. And to be honest, most people are true to their word. You get the odd grandma who thinks they have to report to the insurance anyway, etc.
Deal Expert
Aug 22, 2011
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Shaner wrote: Accident forgiveness is meaningless if your premiums rise in the future and you want to look at changing insurance companies. You will be stuck with your current insurance company for the next 6 years regardless of how much they increase the premiums. It's easy to think you won't change insurers, but you just don't know what will happen 3 years down the road.

The risk of him taking that $1,000 and then going through insurance is slim to none. It's not worth it for him to do that, not over such a small amount of money. Still, have him sign a release document anyway. It doesn't stop him from going through insurance, but it would mean he'd have to pay back that $1,000 if you took him to court. He could also owe you court costs and any other expenses. It doesn't make sense for him to do that.
Everybody will have to do their own due diligence and weight the cost of having an at fault claim.
I trust no one, especially when it comes to insurance and I will gladly take a claim against me to ensure that the other driver does not benefit whatsoever.
Deal Expert
Aug 2, 2001
18124 posts
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It is unlikely that an average person would be able to write up a perfect legal contract. That's one of the reasons law school exists. Instead you want something to indicate what the exchange is for (car accident, date, etc.). For most people, this can probably be done in the memo field of the cheque (if you pay them directly). This will be what you need to handle a small court claim should the need arise, and be plain/generic enough as to not upset the person you are asking to sign it (or in the case of a cheque, cash it).

Regardless of the legality, I for one would never sign a piece of paper that claims I am waiving legal rights or rights to future claims.


Remember, the only person being done a favour here is you. While you need to protect yourself, you also need to walk a fine line and not upset them because they can always go through insurance and be out of pocket NOTHING.


As for the repair cost, it was $1700 to replace my rear bumper. $300-400 was the cost of the bumper, the rest was the cost of painting, blending, removing the fixed rear windows (sub'ed out to a glass company), etc. You can easily call up a shop and get an estimate because it is all computerized now with estimating systems so if you are worried you are being taken for a ride, call one up or visit them.
Deal Addict
Aug 27, 2011
3048 posts
346 upvotes
Toronto
Cough wrote: Every time this question comes up, the conservatives say "don't trust him" "make a claim"

Unless you have reason to mistrust him, then make a sensible decision. I have hit people and settled for small cash; I have been hit and settled for small cash. With no subsequent issues. Yes, get a piece of paper signed that this is his full claim, and he wont put it through to his insurance, and that both of you understand there are no medical concerns. Even if this later went to court, there is a big likelihood that the judge would declare that there is no subsequent case.

Take a worst case - that he says a month later he broke his neck, makes a claim through his insurance to your insurance. You have lost nothing - even the $1000 you paid would be credited against the claim.
Sorry, I've seen it happen multiple times now with friends and colleagues.

No judge can throw out a claim to insurance just because you have a signed note because you cannot block someone from claiming with their insurance without their insurance company signing the note as well.

Yes, people have been nice to you. But that note does nothing to stop people from then claiming their insurance.
[OP]
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Sep 1, 2005
418 posts
57 upvotes
Thanks to everyone for the discussions, a lot of good points was brought up and it has certainly been a learning experience for me. Any ways, I did go ahead with the payment and had the other party sign a general release that covered everything I can think of. To me, the $1000 is worth the gamble. I don't think he wanted to go through a claim to begin with. The black book on his car was worth maybe $2200, so I think he would prefer to take the money over a new bumper. And if he does renege, I guess I'll go to small claims to get the money back. Oh well, another life experience. Thanks again for all the input.
Banned
Jul 2, 2015
395 posts
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Canada
Shaner wrote: Accident forgiveness is meaningless if your premiums rise in the future and you want to look at changing insurance companies. You will be stuck with your current insurance company for the next 6 years regardless of how much they increase the premiums. It's easy to think you won't change insurers, but you just don't know what will happen 3 years down the road.

The risk of him taking that $1,000 and then going through insurance is slim to none. It's not worth it for him to do that, not over such a small amount of money. Still, have him sign a release document anyway. It doesn't stop him from going through insurance, but it would mean he'd have to pay back that $1,000 if you took him to court. He could also owe you court costs and any other expenses. It doesn't make sense for him to do that.
yeah, I agree. Also secretly record him saying stuff like he is NOT injured , nothing happened to him et al. Although he has 2 yrs , I think, after the accident to start claiming some non existing injuries :lol: to make some coin.

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