Entering into a Private Settlement For Car Accidents in Singapore

Accidents are unavoidable sometimes, even in situations where you are being careful. Hence when a motor accident happens, even if it were a minor incident, it is especially useful to know the best ways forward.

We have previously talked about making claims for motor accidents, including how to claim from third-party insurance companies. This article now aims to discuss the option of a private settlement in the event of a car accident. It will cover: 

• What is a private settlement?
• When is a private settlement the preferable way forward for car accidents?
• When is it not possible to enter into a private settlement?
• What should you do if you enter into a private settlement?
• What if the terms of the settlement are breached?

What is a Private Settlement?

In motor accidents, a private settlement is a resolution of the accident between the parties that does not involve making a claim with their respective motor vehicle insurers. The private settlement may result in a compensation made by the party at fault to the other party.

Parties in a motor accident who make a private settlement will usually also agree not to make further legal claims against each other.

However, it is still required for parties in a private settlement to inform their insurers that a settlement has been agreed upon (the repercussions for not doing so are explained below).

When is It Advisable for You to Enter Into a Private Settlement?

If the car accident resulted in minimal to no damage to your vehicle, and more importantly does not involve bodily harm to any party involved, then it might be wiser for the parties to agree to a private settlement.

This is because one of the most important benefits of entering into a private settlement, as opposed to getting the insurers involved, is to preserve your No-Claims Discount (NCD).

The NCD is an entitlement provided to you, the insured, where if you do not make any claims under your car insurance policy for a year or more with the current insurer, then you will be given a reduced amount for the premium that you have to pay for the following year upon renewal.

Therefore, losing one’s NCD by making an insurance claim automatically increases the cost of subsequent car insurance premiums.

When is It Not Possible to Enter Into a Private Settlement?

Any party in a car accident CANNOT resort to a private settlement if the accident involves or has resulted in:

• Death or bodily harm to any person, which may include a non-driving party (such as a pedestrian);
• Significant damage to any property, especially if government property was damaged; or
• A case of hit-and-run.

In the above instances, there are several things that should be done during and after the accident. These include:

• Calling an ambulance immediately if there are injured victims;
• Reporting the accident to the police, if necessary;
• Exchanging information with parties involved in the accident;
• Gathering as much evidence of the accident as possible; and
• Reporting the accident to your insurance company.

Then, you can make a claims for compensation for the car accident through the following ways:

1. Against your insurer in accordance with its procedure for making claims;
2. Against the other party (or the at-fault party) via your own damage claim;
3. To the Motor Insurer’s Bureau, in cases of a hit-and-run and you do not know the particulars of the other party involved; and
4. Via FIDReC (Financial Industrial Disputes Resolution Centre Ltd) in instances of non-injury motor claims below $3,000.

What Should You Do If You Enter Into a Private Settlement?

The first step is to have an accurate estimate of the costs of repairing the damage (if any) to your vehicle. In order to do this, you should take your car to one of your insurer’s authorised workshops to get a written estimate of the costs.

This step is especially important because the parties can decide between themselves how much the at-fault party should compensate the other party for the damage caused in the accident. This ensures that the value of compensation agreed upon remains fair for all parties involved. 

You may also wish to use the Singapore Academy of Law’s Motor Accident Claims Online stimulator to find out who may be the at-fault party and get an estimate of the amount of damages a party can claim.

The next step is for both drivers in the accident to complete and sign a private settlement form or letter. The private settlement form/letter must state the following details:

• Details of accident, including the location, date and time of the accident;
• Particulars of parties involved and their vehicles, including the drivers’ full names, identification numbers and vehicle registration numbers;
• Terms of the agreement, which may include:
  • A statement that no personal injury or death was involved in the accident,
  • A statement that the parties agree to settle the matter amicably;
  • The amount to be paid by one party to the other, or if both parties mutually decided to shoulder their own costs for repair;
  • A statement that both parties will not make a police report of the accident;
  • A statement that neither party will subsequently file a claim for damages based on the accident;
• Acknowledgement of receipt of compensation, if any; and
•  Signatures of parties entering into settlement.

You can check if your insurer has sample private settlement forms for you to use.

It must be noted that under the Motor Claims Framework (MCF), any car accident must still be reported to your insurer within 24 hours. This is even if there is no visible damage, and even if you decide to settle claims privately. Failure to do so may result in:

• Rejection of your future insurance claim, should the making of such a claim be more viable than a settlement;
• Loss of NCD when renewing your policy; or
• The insurer declining to renew your policy altogether.

The completed and signed private settlement form/letter must be submitted to your respective insurer. This is made for recording purposes as even with a private settlement, you can never be truly sure that the other party will not decide to file a claim against you in the future.

What If the Terms of the Settlement are Breached?

A completed and signed private settlement form/letter is considered a contract or a valid and binding legal agreement. As a result, any violation of the terms of the settlement agreement, including if:

• The at-fault party fails to settle the full value of the agreed upon compensation; or
• Any of the parties subsequently file a separate claim for damages based on the accident outside of the private settlement,

is subject to available remedies under the law for breach of contract, including monetary compensation (also known as damages).

There are several avenues that may be resorted to in order to resolve a breach of contract, such as court proceedings or arbitration, as well as the Small Claims Tribunals if the claim is for not more than $20,000.

—

Before entering into a private settlement agreement for a motor accident, it may also be advisable for you to obtain legal assistance.

If you are the at-fault party in the motor accident, an experienced lawyer may help you negotiate a settlement.

On the other hand, if you are the victim of the accident, legal assistance can also help you obtain fair compensation for the damage caused to your vehicle, or for any injury you may have suffered.

Furthermore, obtaining legal assistance might be necessary if a breach of the private settlement agreement occurs and you intend to hold the other party accountable for the breach.

If any of the above situations applies to you, consider consulting one of our experienced lawyers to assist you.