Settling an auto accident without involving the insurance companies is common practice for people who do not want to notify their insurers of the collision. Many people worry that an insurance claim for an auto accident will result in a costly increase in monthly policy premiums.
Notifying Insurance Companies
Insurance companies base the cost of coverage premiums on the risk the customer presents. Previous claims can have an effect on how risky a customer appears to the insurance company, as can subsequent claims that come after the policy is already in place. Some insurance companies will raise premium costs specifically because of an insurance claim, citing a higher risk.
This is the primary reason why many people involved in auto accidents make the decision to settle the accident's costs with the other person or people involved. Oftentimes, this can be a mutual agreement that is worked out easily between the people involved, but other times this situation can be fraught with difficulties and may wind up in a legal battle.
Tips for Settling an Auto Accident Without Involving the Insurance Companies
Before deciding to settle the financial aspects of an auto accident without reporting the accident to your insurance company, examine your motives and the possible pros and cons.
The Reasoning Behind Settling
Think about what your motivation is for settling an auto accident without involving the insurance companies. If you are desperate to keep your insurance premiums low, find out if a collision claim will actually raise your rates. There is a chance that one accident on an otherwise spotless record may not have a very big impact at all on your rates--particularly if the accident was not your fault--so making the claim on your insurance policy may be the more financially advantageous decision to make.
On the other hand, if you have had several auto accident claims in the past, one more claim may send your policy costs sky-high or may result in your policy not being renewed at all. In this instance, getting the other person to agree to a financial settlement may be in your best interests.
A settlement after an auto accident should be a mutually agreed-upon situation where all involved people agree to settle the costs of repairs without involving an insurance company. What happens if one person insists upon a cash settlement while the other person demands on involving insurance companies? One person cannot force the other person to refrain from notifying an insurance company, so it is possible that one person may wind up involving his or her insurer while the other person does not.The key is to make sure everyone involved is on the same page. If your plan is to not involve your own insurance company, but the other person involved with the collision is going to notify his or her insurance company, be prepared to deal directly with the other person's insurance company instead of with that person.
Steps to Take
Despite the fact that one or both insurance companies are not involved, settling an auto collision can be a streamlined task as long as the correct steps are taken.
- Obtain accurate contact information from the other person while also providing your own contact information.
- Keep copies of the police report (if any) as well as any other documentation you obtain pertaining to the collision.
- Obtain two or three estimates for the repair of your vehicle and provide the other person with these estimates.
- Keep record of all conversations with the other person and send all information via Return-Receipt Requested, which will allow you to prove the documents were received if the need should ever arise.
- If payment from the other person is received via check--certified or otherwise--make sure the funds clear before taking your vehicle in for repairs.
The most important thing is to keep accurate records of everything just in case you have to refresh the other person's memory or if the agreement falls apart and the disagreement winds up in court.