I would avoid the 2nd option if I were you. Like stated you take a very large risk relying on the other person's decency having them follow through with what they initially promise. I've heard of many cases when the at fault party begs for insurance not to be involved and promises to pay, only to have them deny paying later on, baulking at your repair quotes, denying the damage altogether or sometimes just falling out of contact completely. With my last car I had an old man open his car door onto mine at a car park (right in front of me) which caused a small scratch, and constantly maintained that "it will buff out" amongst other things even refusing to give me his details. A trip to the cops for refusing to provide his personal info, and then handing his rego to the insurance company quickly got everything sorted in my favor and a resprayed car door out of it. I shudder to imagine getting it sorted out without the insurer's backing.