Blog / Car Insurance
Private Settlement for Car Accidents in Singapore: When and How to Settle Privately
Being involved in a car accident—no matter how minor—can be stressful. In the aftermath, one of the biggest decisions drivers face is whether to go through their insurance company or opt for a private settlement. But how do you know when a private settlement is the better choice?
Let’s break down what a private settlement means, when it’s appropriate, and how to do it right—while protecting your interests and your car insurance policy.
What Is a Private Settlement for a Car Accident?
A private settlement is a mutual agreement between the drivers involved in a car accident to resolve the matter without making an insurance claim. Typically, this means the at-fault party compensates the other party directly—either with a cash payment or by covering the repair costs.
It’s important to note: Even if you choose to settle privately, Singapore’s Motor Claims Framework (MCF) still requires you to report the accident to your insurer within 24 hours or by the next working day—even if you’re not filing a claim.
Failing to report the accident could result in:
- Loss of No Claims Discount (NCD): You may face a 10% reduction in your NCD for the specific accident you failed to report.
- Loss of Policy Protection: Your insurer may have the right to repudiate liability, meaning they could refuse to indemnify you for any third-party claims made against you.
- Declined Claims: Any claim for your own vehicle’s damage related to that incident may be rejected.
- Policy Implications: You may face non-renewal of your policy or higher premiums and excesses in the future due to the breach of contract.
When to Enter Into a Private Settlement?
You might choose to enter into a private settlement under certain circumstances:
Minor Damage With No Bodily Harm
If the accident involves minimal damage to your vehicle and no one (including pedestrians or cyclists) suffered bodily injury, a private settlement may be the faster, simpler option.
Protecting Your No Claims Discount
Making a claim could cost you your hard-earned NCD—especially if you’re the at-fault party. In Singapore, a single claim can reduce your NCD from 50% to 20%, which translates into a significantly higher premium at policy renewal.
Paying a High Excess
If you’ve opted for a higher excess to reduce your premium, the repair costs for minor damages might fall below your excess amount—making an insurance claim impractical.
You've Filed Recent Claims
Too many insurance claims—especially more than two in a short period—can result in higher premiums or even difficulty renewing your policy. In such cases, settling privately may protect your insurability.
When You Should Not Opt for a Private Settlement
Private settlements are inappropriate in the following situations:
- The accident involves bodily harm or fatalities
- The accident causes significant property damage, especially to government property
- It’s a hit-and-run or involves a foreign vehicle
- A police report is legally required
In these situations, the law requires you to report the accident to the police immediately and file an accident report at an authorised Accident Reporting Centre.
How to Settle a Car Accident Privately: Step-by-Step Guide
Thinking of opting for a private settlement? Here's how to do it properly.
1. Get a Written Estimate
Take the damaged vehicle(s) to your insurer’s authorised workshop for a written estimate. This helps both parties assess the cost and agree on fair compensation. Ensure you get an accurate estimate to avoid future disputes.
2. Complete and Sign a Private Settlement Form
A private settlement letter or form must be filled out, signed, and submitted to your insurer for recording purposes. The form should include:
- Date, time, and location of the accident
- Full names, identification numbers, and vehicle registration numbers of all drivers involved
- A statement confirming there was no bodily injury or death
- The agreed compensation amount, if any
- Acknowledgement of payment received (if applicable)
- Agreement that neither party will file a claim or a police report
- Signatures of both parties involved
Download Budget Direct’s Private Settlement Form (PDF) and keep a printed copy in your vehicle for emergencies.
This document protects you if the other party tries to subsequently file a claim or take legal action.
3. Notify Your Insurance Company
Even if you’ve chosen to settle privately without involving the insurers, you're still required to report the accident within 24 hours. Provide your insurer with the completed private settlement form and accident report.
Failing to report the incident—even with a signed settlement—can affect your:
- Motor insurance coverage
- No Claim discount eligibility
- Policy renewal or ability to make a future insurance claim
Key Considerations Before Entering a into Private Settlement
- Do you trust the other party? If the other party is unknown to you, be aware of the potential risks involved in a private settlement. Even with a signed document, there is a risk that the other party may later dispute the agreement or file a claim for personal injury or "hidden" vehicle damages that were not initially apparent. To protect your interests, always ensure you have comprehensive photo evidence and a clearly drafted settlement form, and remember that reporting the incident to your insurer within 24 hours remains a mandatory requirement regardless of any private agreement.
- Were multiple vehicles involved? If more than two parties are involved, it complicates the process. The risk of a third party claim increases.
- Is the damage minor? Sometimes minor-looking damage can reveal significant issues upon inspection.
Frequently Asked Questions
Can I settle privately if I was at fault?
Yes, you may settle privately if the accident is minor and all parties agree. However, a private settlement is not permitted (and you must make a police report) if any of the following "major" criteria are met:
- Bodily Injury: Any party requires medical leave, is taken to the hospital, or passes away.
- Third-Party Property: Significant damage occurs to government property (e.g., lamp posts, railings) or public utilities.
- Specific Vehicles: The accident involves a cyclist, pedestrian, foreign-registered vehicle, or government vehicle.
- Criminal Elements: The incident is a "hit-and-run" or involves a driver under the influence.
If the damage is purely cosmetic (e.g., minor scratches or bumper dents) and involves only two local private cars with no injuries, a private settlement is an effective way to protect your No Claim Discount (NCD).
What if the other driver changes their mind later?
That’s why it’s vital to have a signed agreement and to report it to your insurer. A signed private settlement letter is legally binding and can help protect you from a disingenuous claim – there may be occasions where damage or injury is genuinely only discovered later such as a bruise or a small broken plastic part could be part of a larger piece, and the only option might be to replace the entire part (e.g. some bumper bars/lower bumper sills or front engine grills).
Can I use my own workshop to assess repair costs?
Yes, but for insurance validation and accuracy, it's recommended to use a workshop authorised by your insurer.
Final Thoughts: Is a Private Settlement Worth It?
In many minor accidents, a private settlement for a car accident in Singapore can be a quick, cost-effective way to resolve the situation and preserve your insurance benefits. But it only works when done right—with proper documentation, transparency, and full compliance with motor claims regulations.
Whether you choose to settle privately or file a claim, having the right car insurance policy matters. Explore Budget Direct’s award-winning car insurance for transparent coverage, competitive premiums, and peace of mind on the road.
