How do I settle a car accident without an insurance company?
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UPDATED: Oct 19, 2021
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- If you are involved in a car accident, there is certain vital information that you should gather from the other driver involved right away
- You should never leave the scene of an accident before communicating with the other driver
- If you are involved in a minor car accident, such as a fender bender, you are under no legal obligation to inform your insurance company about the accident
- You may choose to communicate with the other driver directly in the event of a minor auto accident to avoid having to face an increased premium as a result of filing a claim
- It is important to make sure that you are on the same page as the other driver involved in the accident because if he or she files a claim through their insurance, your insurance company will surely receive notice of the claim anyway
The major reason that drivers hesitate in reporting an accident to their car insurance company is that they do not want to deal with having a higher premium rate as a consequence of having filed a claim.
Another popular reason may be that your auto insurance deductible for physical damage to your car is very high, and it just makes more sense to pay for the cost of the repair out of pocket.
If you do decide to settle out of pocket with another driver in an accident, make sure that you have clear documentation of the settlement and that you retain a copy of that for your records.
Information to Collect from the Other Driver in an Auto Accident
According to the Insurance Information Institute, there are more than six million auto accidents every year. The likelihood that you will be involved in some type of car accident in your lifetime is fairly high, so being prepared in the event of an accident is a good idea.
Being involved in an auto accident can be an unsettling experience, even if it is only a minor one.
This is why it is best to be prepared and know exactly what information you should get from the other driver before you leave the scene of the accident.
In general, you should ask for the following:
- phone number
- license number of the other driver
- make and model of the other vehicle involved in the accident
If the other driver is uncooperative in exchanging information with you, it is a good idea to involve the police at this point so that there is an official report on the accident that you can rely upon later.
Even if you intend to resolve a claim without involving insurance, there may reach a point that you have to go through an insurance company. Make sure that you do so within the time period required under your state law and your policy.
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What happens to your auto insurance when you file a claim?
There is no standard rate or formula across all insurance companies that you can rely on in determining whether your insurance rates will increase and by how much after filing a claim for a car accident.
You should be aware that it is possible that your insurance company could decide to simply not renew your auto insurance policy once the current term expires if you have filed a certain number or amount in claims.
In general, however, your policy will only likely be affected by chargeable claims. These are claims that are determined to be mostly your fault.
It is standard for these incidents to stay on your record in terms of what insurance companies view for determining your premium for a period of about three years.
When you are shopping around for auto insurance quotes, be sure to ask if any of the insurance companies offer a good driver discount.
Generally, if you have a clear accident record for a certain period of time, you may be eligible for a lower rate on your insurance. This could be another reason why you may want to hold off on filing a claim through your insurance company.
The Risk in Not Reporting an Accident to Your Insurance Company
If you are involved in a car accident with another driver and choose not to report it to your insurance company, then you are taking on some level of risk.
This is because the other driver could decide to sue you at a later time for the accident, and your insurance company could try not to cover you because you violated your policy by not reporting your claim.
If this happens, you may have a very difficult time defending yourself in a suit because you may have to retain your own attorney.
This means that you will have to front the expenses for the defense of the suit against you as well as whatever damages must be paid out of your own pocket to the other driver.
At the end of your current policy term, your current auto insurance company could also choose not to renew your policy because of your failure to report the incident.
Even if your auto insurance company does decide to honor your policy, you will be at a disadvantage by the time the suit is filed.
You will have lost valuable time in gathering information to defend the claim against you as well as the opportunity to have an inspector take a close look at the alleged damage to the other vehicle.
Based on this potential risk, you want to make absolutely certain that whatever settlement agreement you decide on with the other driver of the accident, you have a copy of the agreement in writing.
It is always better to pay in the form of a check to the other driver or the auto body repair shop rather than cash because the record of payment from a check is easier to prove in court.
Settling an Accident Without Your Insurance Company
There are plenty of reasons to settle a claim without notifying your insurance company, such as not wanting your rates to go up or being able to pay out of pocket for a minor claim.
Make sure that you put all agreements in writing and understand the risks of not notifying your insurer of the incident. Be ready to file a claim with the appropriate insurer in the event that the other party does not fulfill the settlement agreement.