If you’ve been involved in a minor car accident in Texas, settling privately might seem the logical thing to do—to avoid insurance rate hikes, for one.
Or maybe you just want to get the entire episode over and done with; no endless forms, no back-and-forth with the insurance company, just a handshake and some cash.
But here’s the catch: Private car accident settlements can cost you much more in the long run. You might get shortchanged with an offer that doesn’t fully cover your repairs—or worse, land in trouble with your insurance company for not reporting the auto accident.
So, before deciding to settle privately, you should understand the risks involved. We’ll walk you through the pros and cons of private settlements and how to handle one if you choose to take that route.
For more direct advice, schedule a free consultation with No Bull Law to determine whether a private settlement is right for your situation.
What Is a Private Settlement for a Car Accident?
A private settlement is an agreement in which the at-fault driver directly pays the other party to cover property damage, medical bills, and other related costs. In other words, both parties opt to settle without involving insurance companies or a court trial.
If you weren’t at fault, you might consider settling the matter privately when your car only has a few scratches or dents, and you’re certain that you’re not injured.
Here’s the thing—what looks like a minor issue at first can become a bigger (and more expensive) problem later. But before we get to that, let’s see if the reasons for settling privately truly make sense for you.
If the other driver is pushing for a private settlement, they may have a few reasons to steer clear of their insurer. These could include the following:
- Faster Compensation: A personal injury claim can drag on for months, while a private settlement might be resolved in weeks.
- Protects Privacy: When insurance companies step in, the car accident case could go to court, putting accident details on the public record. A private settlement, however, can include a confidentiality agreement, keeping everything discreet.
- Prevents Insurance Premium Hikes: In Texas, the mere fact of having been in an accident can raise insurance rates, even if the driver is partially responsible. This happens when the police report or car repairs are linked to their VIN, and the insurer takes notice.
On the surface, these reasons are all positive. But remember, a private car accident settlement often benefits the at-fault driver more and can lead to complications on your end. So, it's crucial to consider the potential outcome before settling your personal injury case without insurance.
Let’s take a look at the potential consequences of settling an auto accident privately:
1. You Don’t Factor in Unexpected Costs
Even though a private car accident settlement involves getting an estimate of property damage, hidden issues can surface once repairs begin. You might discover serious internal damage, such as alignment problems or electrical malfunction.
When you settle quickly and privately, you won’t be able to recoup costs for any additional repairs that may come up after the settlement.
The same problem happens with medical expenses. Many injuries, like whiplash or herniated discs, don’t show symptoms immediately and can worsen over time.
If you’ve already agreed to a private settlement, you can’t seek further compensation for medical care. That could leave you covering unexpected medical bills out of pocket, all because the full impact of the accident wasn’t clear at the time of the settlement agreement.
2. You Receive a Lower Payout
With a private settlement, it’s easy to underestimate the true cost of the crash. Beyond repair bills, you could be losing income from missed work, racking up rental car expenses, or dealing with ongoing pain and suffering—all of which may go uncompensated.
Without a thorough investigation of your economic and non-economic damages, you risk accepting far less than what you actually need.
To know the full extent of your losses, it’s always best to consult an attorney. They can evaluate all your damages, including future expenses, to ensure your settlement reflects the full impact of the accident.
3. The Other Driver May Be Unreliable
If the at-fault driver is eager to settle privately after a car accident, there’s a chance that they might deceive you. They might initially offer to compensate you but fail to follow through or disappear entirely.
This concern isn’t one-sided, however. If you’re the at-fault driver, the other party could demand more than the damage incurred or even falsely claim you never paid.
Before agreeing to anything, it’s essential to consult an experienced car accident lawyer. They can review the settlement agreement (yes, you should have a written agreement) to ensure it’s legally binding and protect you from potential disputes.
If the other party backs out or makes additional demands, a lawyer can help you take legal action, whether through a breach of contract claim or a lawsuit.
4. You Worsen the Relationship with Your Insurer
If you decide to settle privately and choose not to report the accident to your insurance company, you’re taking a big risk.
How?
Let’s suppose the private agreement falls apart. You won’t be able to file a car accident claim with your insurer. They’ll refuse to investigate or compensate you because you breached their contract by not cooperating with them after the accident.
Beyond losing coverage, you could also face higher premiums or even fines.
You Should Never Agree to Settle Privately In These Situations
While private settlements could theoretically speed things up after driving accidents, it’s usually not a smart choice. Here are some scenarios where you should avoid one at all costs:
- Injury Involved: If someone sustained an injury in the car accident, you must report it to the police per Texas Law. Also, notifying your insurance company ensures compliance with your policy. Failing to do so could create legal complications.
- Disagreements Over Liability: If there are disputes about who’s at fault, you may receive low or no compensation. It’s crucial to involve your insurer and a car accident lawyer to ensure a proper investigation is conducted.
- Suspicious Behavior: You might notice red flags, such as the other driver pressuring you to settle quickly, refusing to share insurance details, or hesitating to involve authorities. These could be signs that they are trying to evade responsibility or are hiding important details from you.
If the accident is minor and there are no disputes, you could pursue a private settlement only if you’re comfortable with the risks involved.
What You Should Do IF You Decide to Settle Privately
If you're still considering a private settlement for a car accident, here's the right way to conduct one:
- Call the police and report the accident to an officer so they can create a crash report.
- Notify your insurance company about the accident to prevent potential complications later. Remember, reporting is not the same as making a car accident claim.
- Exchange contact information with the other driver, including full name, phone number, address, license plate number, and license details.
- Take photos of the damage to both vehicles, along with any traffic signs, signals, or road conditions that may have contributed to the accident.
- See a doctor to detect any hidden injuries as soon as possible. Medical records can support your car accident case so that you can get fair compensation.
- Obtain repair estimates from two to three mechanics. The expenses may be higher than expected, which could make you rethink settling privately.
- Draft a written agreement detailing both parties' names, contact information, accident details, settlement amount, and payment terms. It should include a release of liability to prevent future claims. Finally, it should be signed and dated, preferably in front of a witness or a notary.
- Request a traceable form of payment, like a cashier’s check or a bank transfer, to prevent disputes over whether payment was made.
Why You Should Evaluate Your Case with a Personal Injury Lawyer
Private settlements come with many financial and legal risks since there’s no insurance company involved, so you need to be protected even if it’s a minor accident.
Here’s how a lawyer can help:
- Protecting your rights and providing legal guidance throughout the process.
- Assessing all non-economic and economic damages you could claim, including ones you haven’t considered, like rental car costs, future medical bills, etc.
- Constructing a legally binding settlement agreement and preventing loopholes that may expose you to future claims or disputes.
- Negotiating with the other party to get a fair settlement offer.
- Filing a personal injury claim against the insurance company if the private settlement doesn’t work out.
If you need a Texas car accident lawyer for your private settlement, our personal injury law firm can help you charge forward to get fair compensation. We’ll evaluate your personal injury case and guide you through the next steps.
Schedule a free consultation today with No Bull Law to get honest, risk-free advice.
