A private settlement form is useful for handling minor car accidents where no bodily injuries are involved. Many incidents result in damages that cost no more than $1,000+. As such, it may not be wise to make a car insurance claim.
Here is what you should do:
1. Decide with the other driver(s) on the spot that the damages are minor
2. Get all parties to sign on the private settlement form
If you don’t already have a private settlement form in your car, click on the link below then download and print out at least 6 copies:
Nevertheless it may be a challenge to convince the other party to sign on the agreement if they see an ugly dent on their bumper. After all cars are expensive in Singapore and it’s painful to see their precious in this state.
What both of you should do is drive to the nearest workshop and determine the damage (in dollars and cents). After the other party is convinced the repair cost is not worth claiming under his insurance (or yours), he’ll be more willing to sign on the private settlement form.
Even so, many people are quite ignorant about making car insurance claims. And they have no idea what’s going to happen to their renewal premium after each claim… If you are talking to someone like this, you have to educate him on why private settlement is the most ideal way to conclude the incident.
Why You Should Use Private Settlement For Minor Damages
Two things happen when you make a motor insurance claim:
(i) your NCD drops, and
(ii) your renewal premium increases because the insurer will impose a loading.
The net effect is you have to pay more in premiums for the next 3 years. What you claim from the insurance company will almost always be much lesser than what you have to pay back in the near future.
Suppose you suffer a damage of $1,500 and your excess is $600. In this case, what you can claim from the insurer is $900. Because of this claim, your NCD drops by 30%. This will add an average of $300+ to your annual premium. (The actual value depends on several factors.) Also, there’ll be a loading imposed. This may amount to another $100+ more. In the next 3 years, you’ll easily pay more than your original damage ($900).
Having said this, it does not mean you shouldn’t make an insurance claim. This is because the purpose of motor insurance is to protect you from huge financial loss. For this reason, if the damage is large enough, by all means make a claim.
How to Use the Private Settlement Letter
The private settlement letter must state the following details:
a. Location of incident
b. Date and Time of incident
c. Terms of Agreement
d. Particulars of all drivers involved
e. Signature of a witness
Fill up each field of the form with as much detail as you can. On top of this (if you can), take photos of any damages to your car and the other party’s car.
After signing the private settlement letter, both of you are bound to the agreements stated. As such, you (or the other party) will not be able to make claims against each other. This means you will not experience any complications when you renew your car insurance.
You do not need to make a police report since there is no bodily injury. Yet under the Motor Claims Framework (MCF), you MUST report the incident to your insurer within 24 hours and send them a copy of your private settlement form. In case the other party tries to make a claim against you, his effort will be futile.
Note: In case you are involved in a chain collision, the party in front of you and behind you must sign on the private agreement as well. This is why you must at keep at least 6 copies of private settlement form in your car – 2 for the car in front, 2 for the car at the back and 2 extra copies for contingency.