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Auto accident without liability insurance? Are you trying to figure out if you can just pay the other driver’s repair cost out of pocket and settle the claim on your own? Yes? Yes! Can You Settle Your Own Auto Accident Claim? Yes.
An insurance company is not required to settle an auto accident claim.
| Drivers involved in a simple property damage fender bender can settle their own damage claims out of court, and without the participation of insurance companies. |
There is nothing wrong with one driver trying to settle his/her own claims with another driver peacefully, informally. If an efficient settlement can be reached by informal agreement, it can be a great way to end an auto accident claim without the mess of insurance companies or court.
Informal Settlement
Auto accident claims can be settled by agreement at any time between when the accident happens, and before a court judgement.
Auto Accident Claims can be settled on the side of the road, a month later after the repairs are done, or even on the day before a small claims court trial. Anytime the parties agree on terms to end the claim, it may end. Usually a claim ends when one party pays another, and the parties enter into a settlement agreement to document the end of the claim.
There is nothing wrong with settling your own auto accident claim, even if you caused it without liability insurance. But make sure you get a “release of all claims” document signed by all claimants to protect yourself from a future claim over the same accident.
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Who Needs a Settlement Agreement?
Written settlement agreements are not required to settle a claim. But a person who pays for damages will want one to protect them from future court action on the same or similar claims.
Anyone who is involved in an auto accident and is worried that they might be sued for resulting damages needs a settlement agreement. Anyone who pays for auto accident damages wants a settlement agreement to provide proof that they paid, and what they paid for.
A settlement agreement is proof that a potential plaintiff has given up their claims of damages by agreement. A properly written settlement agreement can be used by a defendant as evidence in small claims court or civil court to prove the claim was already paid and released.
Rule #1 of Settling an Auto Accident Claim Against You: Get a Signed Settlement Agreement That Releases All Claims.
Settlement agreements are contracts that end a money or damages dispute. To a driver paying out of pocket to end a claim for property damage, a settlement agreement acts as protection from duplicate claims, and proof that a settlement payment was made and accepted. A proper settlement agree can be used as a defense in civil court, and can prevent a later judgement in court for damages. What Does a Settlement Agreement Look Like?
Settlement agreement protection can be very simple, as little as 1 page in a common auto accident claim. There is no need to get over complicated or to add arcane legal language from the Greeks. For example, a “General Release Agreement” may consist of a few simple sentences like:
SETTLEMENT AGREEMENT: Driver “Albert” agrees to Pay Driver “Bilbert” $200 for damages after a car accident on 7/7/14 in Los Angeles. Driver Bilbert accepts payment as full settlement of his auto accident claim against Albert. Driver Bilbert acknowledges receipt of payment in cash. The end. //signed
This simple settlement agreement is known as a General Release. It may be a complete defense to a claim by Bilbert later for the same damages.
Unfortunately, if complications arose, it would be a weak protection at best because it fails to describe the nature of damages Albert paid. Did Albert only pay for property damages, and not headaches? or did his $200 settlement payment cover it all?
More protection can be found in a better settlement agreement with more detail. Experienced Defense Attorneys writing a car accident settlement agreement would include more details to protect Albert for other claims by Bilbert. The Basic Terms of a Typical Fender Bender Settlement Agreement.
There is no single perfect way to write a release. Each one must be tailored to fit the facts of the incident, and the agreement the people make. But to be effective and enforceable, a typical auto accident settlement agreement must include:
1. Identity of the Parties to the agreement; 2. Identity of the nature of the dispute (date and location of accident); 3. Identity of the payment terms; 4. Description of the claims being released upon payment; 5. Verified or Notarized Signatures of the Parties; 6. Notice of whether or not the release agreement covers future, unknown claims that may appear later (see below).
There is No Need to Assign Fault or Liability in a Settlement Agreement.
Settlement agreements in this context are really just compromise agreements to end a money dispute. There is no requirement that fault or guilty be assigned in a settlement agreement. The point of the release agreement is just to document the final end of a dispute by mutual compromise.
In fact, it is very common for a common car accident release agreement to state explicitly:
“Liability is disputed. No party admits or assign fault or liability by this agreement.” Defense Attorneys Prefer “Release of All Claims” Settlement Agreements.
When an Auto Insurance Defense Attorney writes a settlement agreement for a minor car accident, it is frequently titled a “Release of All Claims”, and is intended to be more specific in terms of what is being released in exchange for the settlement payment.
The title itself conveys the intent to end all claims related to the subject accident. It documents the fact that one party pays, and the other party gives up all claims in exchange for the payment.
A “Mutual Release of All Claims” settlement agreement is very common in auto insurance settlements. It is meant to specifically document the fact that the parties release all of their claims against each other, both known and unknown, as part of the settlement. It ensures there is no question about whether or not the document covers future claims, and does not assign fault.
Thus, a settlement agreement can be written to release the claims of both parties against each other, or of only one against the other. They can be written to release some specific claims, or all “known and unknown claims”. The more detail, the better. How to Make Sure Future, Unknown Claims Get Released in a Settlement Agreement.
The statute of limitations for personal injury claims in California is probably 2 years (check yourself- it changes). This means that a claimant probably has 2 years after an accident to sue in court for their alleged injuries. Because of this, a claim you though was settled might reappear in small claims or civil court years later.
If you get sued for the accident after you though you settled it, you will want to defend yourself with a “Release of All Claims” that the court can enforce. This means the released claims must be described as broadly as possible, and with clarity.
In many states, including California, there are laws on the books that state a GENERAL RELEASE agreement DOES NOT COVER “unknown” claims, or claims that may appear in the future.
Specifically, keeps unknown claims alive after a release agreement unless those “unknown claims” are explicitly waived after written notice. That law states:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”
How do you turn a “General Release” into one that releases all “Known and Unknown Claims”?
In general, attorneys accomplish this goal by including a notice to the claimant of the fact that the release will in fact cover unknown claims, and a “waiver” from the claimant of legal protections in .
To get the most protection and a release of those claims that might appear in the future, a California release agreement must include the language from Civil Code section 1542 as notice to the claimant, and a specific waiver of their section 1542 rights.
Thus, a well written California settlement agreement that seeks to end all claims, present, future, known and unknown will include a quote of section 1542 as a notice, and a statement that tells the claimant he/she is giving up section 1542 protection.
Here is an example clause:
“4. All Claims, Known and Unknown, Future and Present, Arising from this Accident are Hereby Released.
: ‘A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
Claimant hereby waives all his/her rights under Civil Code section 1542, and releases all claims known and unknown, present or future, in exchange for the settlement payment described above.”
Additional Tips for a Creating a Solid Release of All Claims Settlement Agreement:
1. Make sure you verify the identity of the person you are dealing with and their signature; 2. A driver cannot release the claims of his/her passengers; 3. Dont try to write your own settlement agreement if there are minors or children involved; 4. Dont rely on this article as your only source of information on this topic; 5. Dont be afraid to hire an attorney on an hourly basis to write an effective settlement agreement for you. In most common traffic accidents, a settlement agreement is a 1-2 hr project for an attorney. Final Warnings?
Do It Yourself Settlement Agreements do not work well when there are injuries or minors involved.
Private auto accident settlements do not change the requirements for notifying the (or local equivalent) about an accident.
Check your local state law or ask a licensed attorney for state specific “Release of All Claims, Known and Unknown” language.
Seek the advice of an Attorney you hire to answer your questions. A well written settlement agreement is worth the cost of a couple hours of professional time.
If you plan on paying someone for property damage after an auto accident, make sure they person you pay is the owner of the vehicle that was damaged by your action.
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