Dealing with insurance companies can be a hassle. Moving through a formal insurance claims process can take a lot of time. And time is one thing that is in short supply for most of us.
If damage from a car accident appears minor and no one is hurt, it can be tempting to bypass the insurance companies. Rather than filing a claim, the two drivers sign a car accident private settlement letter.
What is a car accident private settlement letter?
A car accident private settlement letter records an agreement between people who were involved in an auto collision. The vehicle drivers agree not to contact their insurance companies. Instead, they will pay out-of-pocket for any damages. The private settlement letter explains which driver pays for what damages following the car accident.
Why do drivers sign car accident private settlement letters?
If a vehicle collision was minor with no injuries, the driver who caused the crash might not want to report it to his auto insurance company. Car accident claims, even small ones, can cause insurance premiums to increase. In addition, working with an insurance company can be a time-consuming process. The damage may not be worth the investment of time to get the insurance company to pay.
California law does not require drivers to report collisions to their insurance companies. Therefore, many drivers involved in fender-benders with no injuries prefer to pay for their own repairs. At-fault drivers with high deductibles may be especially eager to handle the matter without insurance company involvement. Because of their high deductible, they will have to pay for much of the repairs and then pay increased premiums.
When must a car accident be reported?
If anyone is injured, even slightly, drivers must report the accident to the California Department of Motor Vehicles within ten days. Similarly, if a car crash results in property damage over $1,000, drivers must report the accident to DMV. Both drivers must complete the DMV form SR-1.
If a car accident causes injuries, the best response is to call 911. The dispatcher may send an emergency responder and will notify law enforcement. However, police may not go to the scene of every accident, particularly if the damage and injuries are minor. If police do not arrive at the scene of an accident causing injury or death, drivers must report it. The report must be made within 24 hours after the car accident to the Department of the California Highway Patrol. If the crash happened in a city, drivers can report it to the local police department.
What are the risks of signing a car accident private settlement letter?
Private car accident settlement agreements benefit the driver who caused the collision. The main reason drivers don’t want to file an insurance claim is to avoid higher premiums. Insurance companies monitor every claim made on a policy. Too many claims can lead to higher premiums or even a refusal to renew the policy. Insurance companies can take these steps even if the costs of the accident don’t exceed the driver’s deductible.
If a negligent driver hit you and wants to handle the matter privately, call an experienced car accident attorney before agreeing to any payments or settlements. I have represented car crash victims for more than 35 years, and have seen the outcomes of private agreements. Before you consider signing a car accident private settlement letter, know these hidden dangers of the agreement.
1. The Repairs to Your Car May Cost Far More Than You Agree to Accept
The visible damage to your car may not represent the full extent of the damage. Even minor dents may necessitate replacement of an entire front bumper on some cares. Also, car crashes can cause damage that just isn’t visible, especially as more cars depend on computers for safe operations.
Despite getting an estimate before agreeing to a private car accident settlement, more extensive damage can be revealed as the car is being serviced.
2. Your Injuries May Require More Extensive Treatment Than You Anticipate
If anyone is hurt, private settlements are a problem. First, drivers must report accidents with injuries to the DMV. Page 2 of the SR1 states “The Department may send this part to the insurance company indicated.” That language refers to the section where drivers must enter their auto insurance information. Therefore, the insurance company will likely be notified of the accident and may then get involved.
Second, car accident injuries are often not as minor as they seem. Pain may increase in severity over time or may not appear until after the accident. A car accident private settlement letter usually includes an agreement that the signers release each other from all other claims. This means that you can’t go back and ask for more money when you realize that you will need ongoing medical care.
3. Your Estimation of Damages May Likely Be Less Than What You Deserve
Without a full car accident investigation, you don’t know the percentage of fault for each driver or the full value of your damages. As a car accident victim, you are entitled to the cost of your car repairs and your medical care, but that is not all. You are entitled to compensation for lost wages if you took time off from work related to the accident. Other reimbursable costs include alternate transportation, travel related to medical care, and possibly other expenses stemming from the accident.
With a hasty car accident private settlement letter, you may not have considered all your eligible damages. Additionally, if your car hasn’t been fully repaired or you might have additional injuries, you don’t yet know the full amount to which you are entitled.
4. The Other Driver May Not Be Honest or Reliable
Most auto collisions occur between strangers. If you are considering signing a private settlement letter, you are trusting a total stranger to pay you money. You don’t know if they have the money to pay what they say they will, whether they are trustworthy and reliable, or how to pursue your claim against them if they disappear.
At a minimum, consult with an experienced car accident attorney before signing. I offer a free no-obligation consultation. I will share my assessment of the situation, based on my handling of thousands of car accident cases.
5. You Could Get Into Trouble With Your Insurance Company
If the private settlement agreement falls through or if you decide to notify your insurance company, you may have made your problems worse. You might contact one or both insurance companies because of additional information (like the true cost of your damages) or because the other driver isn’t paying.
If an insurance company is unable to investigate the accident because you waited too long to notify them, they may refuse to seek payment on your behalf or pay your claim. Auto insurance policies usually include what’s called a “cooperation clause.” That clause states how you must cooperate with and notify the insurance company after a car crash. The insured’s obligations include promptly reporting car accidents and assisting with the accident investigation.
Getting Help from a Long Beach Car Accident Attorney
Your Injuries Are Personal To Me
A private car accident settlement may sound like a quick and easy response to a collision. However, the unexpected dangers common to these agreements can cause more problems than it solves.
After representing car accident victims for 35 years, I quickly identify the risks in private settlement agreements. I provide a no-cost, no-obligation consultation for car accident victims. Together we will talk through your auto collision case and estimate the value of your damages. Based on my extensive experience with car accident claims, I can identify the risks of signing a car accident private settlement letter.
Because your accidents are personal to me, I will handle every aspect of your case. I will fight for you to obtain the full compensation to which you are entitled.
Call the Law Office of Michael D. Waks today at 888-394-1174. You can also use the convenient online contact form to schedule a free consultation.
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