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Auto Insurance Claims/settlement without involving insurance

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Expert: webfoot - 9/22/2007


Question
A car backed into the passangers side of my car as she was pulling out of a parking spot.  She claims she did not see me.  I got all of her insurance information but she requested to leave insurance company out of it and that she would pay me in cash if I could get some estimates.  Is this illegal?

If not, are there any consequences waiting to report this accident to her insurance company if she decides not to pay cash for the damages.

Answer
It is perfectly legal for someone to settle their own damages.  However, it creates a precarious situation with insurance in the event that they do not pay up.  There are two reasons for this.

First, if the person fails to report the accident to their insurance company in a timely matter, the insurance company may deny the claim as they could lose their right to investigate while all of the facts are fresh.

Secondly, an individual cannot legally obligate their insurer to liability where the insurer was not a party to the settlement.  

If you are willing to get your estimates quickly and they are willing to settle quickly, then that may seem ok at first.  However, what if the shop has part price increases or finds hidden damage?  Will you be able to go back to that person then?

Most people have no idea how expensive body repairs can get and once they are presented with the estimates, will likely use insurance anyway.  Therefore it is best for the protection of both parties to allow the insurance to handle it from the start.

Good luck!

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webfoot

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Auto damage, liability, insurance fraud. I am a full time auto insurance adjuster with experience in collision, theft, liability and fraud investigation. I am also an ASE Master Auto Tech and I-Car Collision Platinum certified. My experience includes 15 years in the auto repair industry, a B.S. in Criminal Justice, Law enforcement and auto insurance. ****** NO "PRIVATE" QUESTIONS WILL BE ANSWERED. I HAVE FOUND THAT NEARLY ALL PRIVATE QUESTIONS COME FROM PEOPLE WHO ARE CONSIDERING OR ATTEMPTING TO COMMIT FELONY INSURANCE FRAUD AND I'M NOT HERE TO HELP YOU! ****** I AM HERE TO ANSWER AUTOMOTIVE REPAIR, CLAIMS PROCESS AND SOME SIMPLE LIABILITY QUESTIONS. I CANNOT ADDRESS COMPLEX LIABILITY SCENARIOS WITHOUT HAVING ALL OF THE INFO FROM BOTH SIDES IN FRONT OF ME. QUESTIONS ABOUT PREMIUMS OR HOW INSURANCE IS RATED SHOULD BE ADDRESSED TO YOUR PERSONAL INSURANCE AGENT WHO KNOWS A WHOLE LOT MORE ABOUT YOUR HISTORY THAN I DO. I'VE NEVER SOLD INSURANCE AND DO NOT KNOW IF YOUR INDIVIDUAL INSURANCE RATES WILL GO UP IF YOU MAKE A CLAIM. THOUGH I'VE HANDLED SOME VERY MINOR SOFT TISSUE INJURY SETTLEMENTS, I PREFER NOT TO ANSWER INJURY RELATED QUESTIONS. I'M NO INJURY EXPERT AND I'LL LIKELY SAY SOMETHING TO HURT SOMEONE'S FEELINGS AS I BELIEVE THAT MANY SOFT TISSUE PAIN AND SUFFERING CLAIMS ARE OVER DRAMATIZED. UNLIKE MANY OTHERS, I AM ON THIS FORUM AS A VOLUNTEER WITH NO PRODUCTS OR SERVICES TO SELL AND PROMISE AN UPFRONT ANSWER BASED ON MY EXPERIENCE IN BOTH SIDES OF THE INDUSTRY. IF YOU PROVIDE ME WITH A HONEST VERSION OF EVENTS, I PROMISE A CANDID AND HONEST ANSWER IN RETURN. I CANNOT ADDRESS ALL CLAIM SCENERIOS DUE TO DIFFERING STATE LAWS AND REGULATIONS, BUT WILL DO MY BEST. PLEASE REMEMBER THAT AN HONEST ANSWER MAY BE ONE THAT YOU DON'T LIKE SO IF THAT IS GOING TO BE A PROBLEM, PLEASE DON'T ASK THE QUESTION. LASTLY, I DO NOT ACCEPT RATINGS AS I DON'T DO THIS FOR RATINGS AND WISH TO SPEAK FREELY.

Experience

20 years in automotive industry, Currently in insurance claims, worked actively as technician and shop owner until about 10 years ago. Current ASE Master Auto Tech and I-Car Platinum Collision Certifications, B.S. Criminal Justice and 10 year auto insurance/extended warranty background

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