Advice On Private Insurance Settlement

[Over Carl]

My mum was involved in a bump and decided to settle privately at the suggestion of the 3rd party.

Took it to bodyshop of his choice who produced their bill which we paid without argument. However we did get receipt signed stated third party had been paid a specified sum as full and final settlement for any claims arising from the incident on a without prejudice basis.

Dunno if he actually got his repaired or just pocketed the cash but we weren't too bothered, sorted Mum's car out and got that back on the road.

About 10 weeks down the line, Mum gets letter from her insurance asking about an alleged incident on the same date as the incident previously mentioned, and the same location.

However strangely the sections for owner/driver/vehicle/reg are all filled as unknown.

Called up the third party who said he did not inform his insurance, but then didn't want to spend any longer on phone. I first got the feeling he is pulling a fast one, hence not wanting to speak further, but I remembered he is a cabbie so it is also plausible he just wanted to get on with driving.

This leads us to scratch our heads wondering who informed the insurance?

3rd party? (but then he would be in breach of contract considering our private settlement....)
Recovery service? (but shouldn't the Data Protection Act stop them.....)
Council or other type of authority who may have seen on CCTV, and possibly want to claim for a tiny tidy up or similar service?

Anyone got ideas on best way to proceed?

I've been reading online and seen people suggesting private settlement can easily be ignored for all kinds of reasons, the best being:

1. That the person agreeing has not been properly legally advised so did not fully understand the agreement and therefore agreement is invalid. I struggle to believe that as that would mean I could walk into a bank, ask to borrow £10k, then tell them to get stuffed when it comes to paying anything back as I didn't understand the agreement.
2. That a person cannot sign away their legal rights (just like I could not authorise anyone to murder me for example). But then surely this would also apply to any settlements made by insurance companies as well as those made privately?