Often, when involved in a minor accident the two parties decide on their own to handle the damages without filing a police report or making an insurance claim. This may seem the logical choice to avoid a rate increase, but sometimes the plan backfires. This is when drivers realize the sure-way of getting compensation is by going through conventional insurance methods.

Although details may differ, the following example is not an isolated case.

Max was driving along a quiet street when seemingly out of nowhere, the driver behind him slammed into the rear of his vehicle. As Max emerged from his car, he recognized the other driver: it was Sam, a neighbor from down the block.  

Sam apologized and pleaded with Max to forgo usual protocol of a police report and follow-up insurance claim.

“I’ll take care of this out of my own pocket,” said Sam. “Doesn’t’ look like it’s anything major; just bring it to the auto body shop and send me the bill! I’d rather go this route than have my insurance premium ultimately increase…”

Max thought he would have nothing to lose so he brought the car to the auto shop and had the repair work done. The bill was markedly more than he had surmised. Max contacted Sam who assured him he would take care of the bill after the work was done.

Long and short of the episode is that Max ended up paying for the repair work, with Sam promising to reimburse. Today, two months afterwards and countless reminders about the bill, Sam has yet to cough up the payback funds…

Like Max, many people involved in an accident suffer the consequences of not going through insurance channels.

Though the other driver may seem sincere about footing the bill, there is no guarantee he or she will fulfill the commitment. By the time the damaged car’s driver realizes there’s a financial dead-end, it may be too difficult to demonstrate evidence of what actually occurred to the insurance company.

Moreover, the other driver may renegade by informing his or her insurance company about the accident. His or her narrative, in fact, may differ from what actually occurred – with a stretch of facts that may include injury that warrant a big payout from your insurance company. The chain of events purported by the other driver may even make you the subject of a lawsuit, liable for out-of-pocket charges – and a significant rise in your insurance premium.

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