I recently had a small fender bender. It was my fault. The damages to the other party were under $2500.00 and they have agreed to handling it without involving the insurance company (I pay them the damages directly). This works to my advantage as the accident does not go on my otherwise clean record. However, what prevents the other party from going to the insurance company after I pay them? Should I have them sign something that says that they forfeit all claims against me for that accident in exchange for x dollars? Or is it enough that they cash my check?
I know, I know. You are not my lawyer. I am not your client.
I’m not sure what you’re doing is legal re your obligation (if it exists) to report claims to your insurance carrier. If you’re going to go down this path it would seem that the less incriminating paperwork you generate,the better.
If they put in an insurance claim after you have compensated them for the accident (get them to sign a receipt for the payment!) then that would constitute insurance fraud wouldn’t it?
I would ask them to sign a receipt that says they are accepting your payment as full and final settlement of all claims relating to the accident that occured. Make sure you get copies of the repair estimates as well.
That being said, they can still file a claim with your insurance, with you already paying them for their damage they won’t collect anything but nothing prevents them from calling your insurance company.
I don’t know about forfeiting claims against you to the insurance company, but it really is a good idea to get them to sign something acknowledging receipt of the money, and that said money ends your transaction with them such that you owe them nothing further.
Just curious, you say under $2500 in damage? How much under? What is your deductible? Is it really worth it not to go through your insurance company? Would your rates go up so much to justify spending 2500 to fix a car out of your own pocket?
Who is getting the appraisal for the body work? The people who you are paying might just get one estimate from the most expensive (with them thinking it was the best) place and you have to pay for it.
What if the work is not done properly? If it was through the insurance company it would be out of your hands. Since it is not, you might be liable to have it redone or done to the person’s satisfaction.
If it were $100 dinged bumper, I would say pay for it on your own. If it is not too late, contact your insurance company and explain your situation to them (after reading your binder, perhaps).
I did it once, wrote the woman a check based on what she said the estimate was. She cashed the check and I never heard from her again. I wouldn’t necessarily make the other person sign something legalese, because if it does blow up and end up in court, then there will be loopholes. By them cashing the check you can prove that you paid them and you have “good faith” on your side.
I would also recommend handling it rapidly, so they get their car fixed and have no reason to call your insurance company. A friend of mine was in the receiving end of a fender bender and the other driver wanted to handle it off the record, so to speak. Well, when she called him with the price, he balked and wanted another quote and etc. She called his insurance company instead of dealing with him. They were nice about it and sent a claims adjuster and they wrote her a check for more than her original quote.
Actually FMG has a point. If it’s really $ 2500 it would probably be better to let you insurance company take care of it, as long as your driving record is not terrible there’s typically some degree of forgiveness on a first accident. Is this is going o be the final straw for your insurance company, handling it yourself might make sense.
This seems to be a common practice and I think a foolish one. If you’re concerned about the financial liability of raising your insurance rates you should consider what you’re leaving yourself open to by not following legal and contractural procedures. In addition to your insurance company, you may be required to file a written report w/ your state DOT/DMV. Every state has their version of requirements, here’s one example from Oregon.
"Accidents in areas open to the public for the use of motor vehicles must be reported. Some drivers who are in accidents offer to fix the damage and try to get the other driver not to file a report. If you agree to do this, you are breaking the law if the amount of damage is more than $1,500. Always remember to keep a copy of your report for your own records.
You must file a report even if your vehicle was the only one in the crash. If you do not report an accident when required to do so, your driving privileges will be suspended."