Private Settlement After a Car Accident: Things you Should Know.
Private Settlement After A Car Accident - What You Should Know
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Nobody wants to get into accidents; no car owner wants as much as a scratch on their car. But it can happen - from a minor scratch to damages that requires new car parts or even a new car.
No one is exempted from unexpected events, but smart motorists know that having a great insurance plan can help shoulder the costs if it occurs.
In this article, we will discuss everything about a private settlement for an accident also when and why you should opt for a Private settlement.
What Is A Private Settlement?
If there is a motor accident and the parties involved agree to resolve the issue without filing a claim from their motor vehicle insurers.
To enter into a private settlement, both drivers must complete and sign a Private settlement letter that you must submit to your insurer within 24 hours of the incident. This document is legal and a binding agreement between both parties.
Any party that breaches this agreement is subject to sanctions under the breach of contract and payment for damages.
Under the Motor Claims Framework (MCF), you must inform any accident to your insurance company between 24 hours even if damage to the vehicle is not visible.
When Should You opt for Private Settlement?
If the accident is not complicated.
Pick a private settlement when there is no bodily harm or injury to either party and minimal or no damage to either vehicle. It is better to get into an agreement privately.
To protect your No Claim Discount (NCD)
It is wise to enjoy the discount your NCD provides and opt for a private settlement. If you file a claim for a small repair, you could lose your NCD and even pay higher insurance, unless you have NCD protector plans in place.
You have been previously filing for claims for other accidents.
Here in Singapore, if you file for over two claims during your insurance period, your insurance company will label you as a high-risk driver, this will incur higher premiums, and in some cases, insurers might not renew your insurance plan.
If you pay higher excesses
Some drivers choose to pay a higher excess to reduce their insurance premiums. Filing a claim for small repairs will affect your higher excess payments, and also you might get a drop in your NCD or worse, losing it.
When Not to Enter A Private Settlement?
- There was bodily harm to either party or even death. In case, there was a ghastly accident resulting in death or life-threatening injuries, the incident should be reported to the police. [ here’s a quick guide on how to report a car accident ]
- Severe damage that out-of-pocket expenses cannot cover. In the instance of an accident, a car or both cars are damaged beyond repair. If there is a need for a new replacement or payment for hefty sums for repairs, the private settlement is not an option. It also applies when a motorist damages government property.
- When there was an incident of hit and run. You cannot enter a private settlement when an accident as severe as a hit and run happens. You’d have to call in the authorities.
Now, you know what a private settlement is and when to and when not to opt for a private settlement? Let us talk about how to get into a Private settlement.
Whether you are the at-fault motorist or not, the arrangement is the same.
Steps to Get into a Private Settlement
Step 1. Get an Accurate Estimate of the Repairs Costs
Take the damaged vehicle to your insurer's authorized repair shop to assess the damage and get a written estimate of the costs of repair. This is standard procedure, so the at-fault party can know how much they will pay as compensation.
Step 2. Complete and Sign A Private Settlement Letter.
As we mentioned before, this letter is a legally binding document between parties involved in an accident, containing all the information about the accident, and the terms and conditions of their agreement.
A private settlement letter contains the following details:
- Details of the accident, including the location, date, and time of the accident.
- Details of parties involved and their vehicles. Including the full names of the drivers, identification numbers and vehicle registration numbers.
- Terms of the agreement, which may include:
- A statement that no bodily harm or death happened.
- A statement that both parties have resolved the matter between themselves.
- The amount the at-fault party is to pay to the other, or if both parties decide to pay for the cost of repairs themselves.
- An agreement that neither party will make a report of the accident to the police.
- An agreement that neither party will subsequently file for a claim for damages to their insurer.
d. Acknowledgement of receipt of compensation and signature of a witness, if any.
e. Signatures of parties entering the settlement.
Step 3. Inform Your Respective Insurers and Send Them A Copy of Your Private Settlement Form.
Completing, signing, and sending a copy of your letter to your respective insurers is required by the Motor Claims Framework. You are also required to inform your insurer if you are involved in an accident and within 24 hours.
The Private settlement letter also protects you if the other party goes behind your back to file a claim or refuses to pay the agreed compensation amount.
We never plan for accidents, but at least we can be prepared. You can ask for copies of private settlement letters from your insurer and have them stored in your car. A driver should always opt for a Private settlement when it makes economic sense
Want some advice on how to pick the right car insurance that will cover you and your vehicle sufficiently for any unforeseen mis happening? Call the car insurance experts at DirectAsia on 6665 5555 or get a quote online.