Key Takeaways
- Settling a car accident privately can seem convenient, but it comes with legal risks.
- California law doesn’t require insurance for every situation, but failing to involve insurers can backfire on you.
- This guide walks you through when it’s legal, when it’s risky, and how to avoid costly mistakes.
After an auto accident, you may wonder about a car accident settlement without insurance. Settling the accident privately without the insurance company could work against your best interests, leaving you worse off if you discover your damages are more than you expected.
At Azizi Law Firm, we help victims through every step of their accident claim. This blog post explains what’s involved with a car crash with no insurance settlement, why you may want to think twice about taking that route, and how a car accident lawyer can help.
Why Some Drivers Want to Settle a Car Accident Privately
After a car accident, many drivers want to avoid the insurance company for a variety of reasons, including:
Worries About Auto Insurance Rates Increasing
The at-fault driver in a car accident, whether they have a history of accidents or not, may not want to involve the insurance company out of fear of rising rates. Even at the state minimums, insurance is an expense that many drivers want to keep from eating away at their entire budget.
Thinking It’s “Just a Minor Fender Bender”
Some may choose a private settlement when they think a car accident is minor. Their rationale is that it’s silly to involve the insurance company in a car accident with minimal damage and no injuries.
Legal Overview: What State Law Says About Settling Car Accident Without Insurance
Are You Allowed to Settle a Car Accident Without Reporting It?
While state law requires you to report the accident to law enforcement when there are damages over $1,000, injuries, or fatalities, there’s no law that mandates that you must report the accident to the insurance company. However, just because there’s no law requiring it doesn’t mean that it’s the best action.
What Happens If You Don’t Report a Crash to Your Insurance Company?
Insurance company policy agreements typically require accident reporting. Whether you caused the crash or not, if you settle a car accident without informing your insurance company, even in a minor collision, you may lose your coverage by violating their terms.
Additionally, if you discover that indeed you have an injury or more property damage than you thought, your insurance company may refuse to cover this wreck. They may also raise your premiums as a result of your failure to report as per your policy agreement.
California Vehicle Code and Insurance Requirements
All drivers in California need to show they’re financially responsible by carrying their car insurance policy card with them at all times. The minimum coverages in California required by law are liability insurance of $30,000 for bodily injury or death per person, $60,000 per accident, and $15,000 for property damage.
What You’re Risking by Not Involving Insurance
Future Auto Insurance Claims and Hidden Injuries
A driver involved in a fender bender must exchange contact information with the other person and inform their own insurance company of the crash. Failing to do so may jeopardize any future claims you may have. Additionally, you may have hidden injuries that soon come to light after the accident occurred, and the other driver’s insurance company may not cover those costs.
Paying for Medical Bills or Lost Wages Later
A minor accident can still cost you in medical bills and lost wages. You’ll forfeit this compensation if you don’t involve the insurer.
At-Fault Drivers and Personal Injury Law
It will be an even greater challenge to hold the at-fault party liable if you find your damages warrant a lawsuit. Failing to involve the insurer could be held against you in a civil case.
Lack of Legal Defense if the Other Party Changes Their Story
On the accident scene, the other party may have offered to pay you off then and there to avoid insurance involvement. Later, they may change their tune, and without a police report or evidence of your reporting to your insurer, you may be blamed.
When Private Settlements Might Be an Option
In minor car accidents that have no injuries, such as bumping into a parked car while going less than 5 mph, it may make more sense to work with the party involved rather than file a personal injury lawsuit or involve the insurers. If you’re in a single car accident and damaged only your car, you may be willing to handle the matter privately rather than file a claim.
However, what counts as a minor or major accident is the key here. Repair costs and going to an auto repair specialist or body shop to get a few quotes can give you a better idea of whether you need to file a claim.
If things are indeed minor, as long as there’s a mutual agreement between you and the other driver, you may be able to settle this matter privately. Creating a written settlement agreement is advised to prevent issues down the road.
What to Include in a Private Settlement Agreement
If you settle without insurance, make sure you and the other person sign a legally binding agreement. This agreement should include the car repair terms, such as the repair shop where it will be fixed, the timeline for completion, and the settlement amount.
In addition, it would be prudent to add verbiage about waiving future claims. Otherwise, what could stop the other party from filing a claim in the future? The details of the at-fault car accident, contact and insurance information, and driver’s license number for each party should also be included.
Since contracts like these can be complex, it’s important to do things right to protect your legal rights. For these reasons, it’s ideal to consult an attorney ahead of entering into this type of agreement.
Important Red Flags to Watch Out For
The Other Driver Refuses to Provide Car Insurance Information
If the other driver refuses to share their insurance credentials or gets sketchy about calling the police to file a police report, never agree to work things out without insurance. Carry on with calling the police and reporting to the California Department of Vehicles.
The Damage Seems Worse Than Expected
If it looks like getting your car fixed is going to be expensive and costly, it’s never wise to settle between two parties without involving insurers.
Any Physical Injuries, Even Small Ones
Most people underestimate their injuries, which can come back to haunt them. You may sign a mutual agreement only to start feeling off days or weeks later. If you have an injury, you may then be stuck paying out of pocket.
Rental Car Involvement or Parked Car Damage
In accidents with motor vehicles that were rented or parked, more complications may arise, and it’s best to file a claim to get the coverage needed.
What to Do If You’ve Already Settled Privately
Whether you were or weren’t at-fault, if you settled with the other driver privately, you can still file an insurance claim. However, the process will be much more complicated than it would’ve been if you’d simply contacted insurance from the start.
If you’re now realizing that this wasn’t the best way to deal with the accident, you need to protect yourself from future legal action. You can do that by consulting a car accident lawyer, and since most offer a free consultation, it’s a great chance to learn more about your available legal options that are specific to your situation.
What a Personal Injury Attorney Can Do for You
Your attorney can help you recover your medical bills or any other costs that you’ve incurred from the other driver’s negligent actions to ensure a fair settlement. After sharing the accident details with your attorney, they can help you learn more about the rights you have under the law. Never wait to speak with an attorney after an accident. Their legal knowledge can be a tremendous asset, even from the very beginning of your claim with insurers.
FAQs
Is a private car accident settlement legally binding in California?
Yes, this is a legally binding document when both parties have inked their signatures. In most cases, you can’t file a lawsuit for the same issues after accepting a settlement, though there are exceptions. Speaking with an attorney immediately is the best way to determine your next move.
Can I avoid my deductible by handling the accident myself?
California is an at-fault state, and the driver who caused the accident should be paying for the damages, which will include your insurance deductible.
What happens if the other party changes their mind after agreeing to settle?
Visit our law offices for a free consultation and we will review your agreement and determine the next steps to take.
