You’re driving along and suddenly get rear-ended.
After recovering from the shock, you inspect your vehicle (the damage isn’t too bad) and pull out your license and insurance information to exchange with the other driver. But instead of his insurance documents, he offers you $500 cash, as long as you promise to not report the accident to your insurance company. While on the surface this may sound like a great idea – a way to avoid all the hassle, not to mention putting a few hundred or thousand bucks in your pocket – in reality this is actually a really bad idea. Here’s why:
Following an automobile accident, it’s not unusual for a sudden and excessive flow of adrenaline to mask possible injuries that won’t be felt for several hours or days. You could have delayed neck and back stiffness or a severe strain that could take days, weeks or even months to go away.
By not reporting the accident to your auto insurance company, all of your expensive medical bills could be out of pocket.
The damage may not appear that bad at first glance, but once you’ve taken the $500 to keep the fender-bender between you and the other driver, you’re stuck if the damage is more extensive. What looked like a simple broken taillight just turned into a $3,000 expense when the body shop advises you of additional hidden damage you didn’t notice.
This could include damage behind the rear bumper or damage to the exhaust system, suspension, unibody and frame. Whatever the cost, the burden is now on you to pay out of pocket.
Most auto insurance policies cover the cost of a rental car while your personal vehicle is being repaired by an approved body shop. You may not have considered this at the time of the accident and now the money you accepted at the scene is nowhere near what you need to pay for the car you have to rent until yours is ready.
Taking any amount of cash from another driver who is at fault in an accident and not reporting it when damage exceeds $500 could leave you holding the bag, so to speak. In fact, you may have unknowingly implicated yourself in an insurance fraud scam. Under the scam, the driver who hit your car convinces you to accept his cash offer, then files a police report himself, claiming you backed into him and fled the scene.
They could even sue you for injuries you purportedly caused them and their occupants when you backed into their parked vehicle. Because you didn’t report the accident to your insurance company, you’d have a tough time proving your innocence and the culpability of the perpetrators.
A Final Note
Don’t automatically assume the other driver is going to play fair just because he or she gave you cash to cover the damage to your car. The other driver may have done it for a number of reasons – from having no car insurance to more dishonest ulterior motives.
Moral of the story? Protect yourself by never accepting cash at the scene of an accident. If the other party refuses to share his or her information, contact the police and report the incident to your insurance company immediately. Although it could result in a temporary increase to your auto insurance rate, it could ultimately save you from a great deal more.