How Can Private Settlement After A Car Accident Help In Your Car Insurance Renewal?

If a car accident occurs with just minor damage, and no risk that some injury claim will arise down the line, it is a good idea for an at-fault driver to have a private settlement with the driver who is not at fault. A private settling after a car accident can help you during the renewal of your car insurance policy. Find out how this is possible.

Hike in insurance premium rates

When you report of an accident to your insurance company, there will be a hike in your insurance premium rates if it is your fault and the claim amount is substantial. It will take as long as 3 to 5 years to reach your full No Claim Discount (NCD) in most cases if you are found to be the driver responsible for the accident.

Long penalty period

For property damage claims, 3 years is a common period for penalty. Drivers at fault are penalized for a longer period by insurance agencies for accidents that lead to grave physical injuries or which are seen to arise as a result of driving recklessly or in an intoxicated state.

However, it is important to remember that when you report a car accident it does not mean that there will be an automatic hike in your auto insurance rates at the time of policy renewal. A rate hike can possibly happen when your claim amount is high and you lose your NCD and without the discount you use to enjoy, your insurance premium is bound to increase.

No black spot on your insurance history

With a private settlement done with the third party, it will not be recorded as a claim to your insurance company and this will not affect your renewal. However, you should still doing a reporting to inform the insurer and present the Private Settlement letter to them to ensure the third party will not back claim against you and even if they do, the letter will not allow them to do so. This is the reason why, in case of minor accidents where there is scope of settling the matter with small amount of cash sum, a private settlement can be a wise decision on the part of an at-fault driver.


After a car accident, the true extent of injuries or damage might not be fully apparent for some time. This is why, insurance experts caution against accepting a monetary settlement for settling an accident immediately, without getting insurers involved. However, if you are the driver responsible for an accident, it is better that you request the other driver to go for a Private Settlement and avoid any potential claims and affect your upcoming renewal and losing your NCD.

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