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When should you do a private settlement after an accident?

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Nobody wishes to get into an accident. But if you are unlucky enough to be involved in one, would you know what to do?

If the accident is serious, you would definitely want to inform your car insurer, make a motor insurance claim and have them take care of the expenses resulting from it. But what if the accident is minor? Should you still file a claim?

Under certain circumstances, it would make sense to avoid filing a claim and go for a private settlement instead.

Under a private settlement, the parties involved agree to settle the matter amicably without suing each other.

In instances where the damage inflicted on your car is estimated to be below or even slightly above the deductible, you should opt to handle the repairs out of pocket.

But first, you should make sure you get an accurate estimate of the costs of repairs. All too often, the cost of repairing even minor damages can amount to more than you would expect.

You may wish to take the car/s to an authorised workshop and get them to give you a written estimate of the costs before you make your decision.

You ought to do this because should the final bill turn out to be above your estimate, you may be unable to claim the costs from your insurance company. This is the case as insurance companies have a time limit for claiming for an accident. Check your policy for this information.
Whatever the case, motorists in Singapore are required to report an accident to their insurance company within 24 hours or the next working day after the accident even if they are not claiming for it.

If you do not do so, your No Claims Discount (NCD) will be affected upon renewal of your car insurance and if you choose to submit a claim later, it could be rejected.

Even if you decide to settle privately, do not agree to not report the accident. If the other driver decides to report the accident and you don’t, your car insurance policy could be affected.

Also, you cannot be sure that the other driver won’t file a claim against you later.

When you might want to opt for a private settlement:

  • The accident is uncomplicated

It is an accident where only your car is involved.

  • No injuries and minimal damage

If two cars are involved, it should be a case in which neither of you is injured and there is only minimal damage. Even in such a situation, the afflicted party should preferably be known to you or someone whom you trust. In a situation where you don’t know the other driver, you should proceed with caution. This is because he or she could go back on the agreement to not involve insurance companies. This could occur for various reasons. Perhaps they have incurred pain, hours or a day later after the accident or discovered that the damage to their car amounted to a lot more than they had originally expected.

  • You’ve filed for other accidents

Filing a claim too many times through your insurer will lead to a hike in your premiums. In fact, in Singapore, if you file for claims more than twice, you may experience difficulty when it comes to purchasing car insurance. A high claims record indicates to your insurer that you have a high-risk profile, which can then make them reluctant to insure you.

  • It affects your No Claim Discount

You are determined to protect your No Claim Discount (NCD). Your NCD is the discount on your premium if you haven’t made any claims on your policy during the current period of insurance.
The discount you get off your yearly premium can be substantial, so it may not be worth submitting a claim for small repairs as it will jeopardise your driving record.
However, do remember that you may still get your NCD if you are deemed not liable for the accident.

  • You are paying high excess

Some drivers opt to pay a higher excess in order to reduce their premiums. If your claim is small, it might not be worth your while to submit a claim as you will need to account for the high excess besides incurring the risk of losing your NCD.

If you decide to settle privately, your settlement should be recorded in writing. Some insurers provide private settlement forms which you should keep with you in the event of an accident.

Wherever you go, whatever you do, it’s vital to have good car, motorcycle and travel insurance cover.
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