Debt collector threatening lawsuit over accident I didn't cause — do I just cave?

Not legal advice, but: yes, you should at least consult with a PI or civil defense attorney at this point even though you have insurance. Here's the thing — your insurance company's job is to protect their interests, which usually aligns with yours but not always. If a lawsuit actually gets filed naming you personally, you want to understand your exposure before that happens, not after. Many attorneys do free consultations and can tell you pretty quickly whether this threat is serious. The fact that a collections agency (not the original insurer) is sending these letters is also worth discussing with a lawyer — there are specific rules about how and when claims can be assigned to third parties.

When your insurer said the claim was "resolved," that usually means one of a few things: they denied the claim, they paid something and the other party signed a release, or they made a coverage determination and closed it on their end. You need to call your insurer and ask specifically what happened with that claim file — did they issue any payment, and is there any open subrogation action against you personally? Get that answer in writing if you can.

Also, something vague you said at the scene is not an admission of fault in any legal sense. Adjusters and collectors love to treat shock-of-the-moment comments as confessions. Don't let that frame stick in your head.

Yes, statute of limitations absolutely matters here. Depending on your state it could be anywhere from 2 to 6 years for this kind of civil claim, running from the date of the accident. If they've been slow-walking this for two years, you're potentially getting closer to that window closing — which is probably why they're turning up the heat now. I'd look up your state's SOL for property damage claims and personal injury claims separately, because they can be different. Not telling you to bank on it, just saying it's a real factor.

I went through almost exactly this kind of slow-burn harassment after a fender bender where fault was disputed. Kept getting letters, kept pushing back, letters kept coming. Eventually I talked to an attorney just for a consultation and honestly just having that conversation made me feel so much less like I was going to get steamrolled. The attorney told me what the actual realistic risk was and I could finally sleep. Even if you don't hire anyone, just getting a real picture of your exposure is worth it.

"Prepared to pursue legal action" is one of the oldest lines in the collections playbook. It can be real, but a lot of the time they send that letter to everyone in the pile hoping some percentage just pay up. The fact that they've offered you a reduced lump sum twice actually tells me they're not super confident in their case — if they had you dead to rights they'd just sue.

For real though — the fact that they keep settling for less and then going quiet for months at a time suggests they don't have the strongest hand. You've held your ground for two years without a lawsuit materializing. That's actually meaningful. Get a consult, know your rights, but don't assume the worst outcome is inevitable.

Stop negotiating with the collections agency. Seriously. Every time you counter-offer you're implicitly acknowledging that you owe something, which can come back to bite you. If you truly believe you didn't cause this, act like it. Either dispute it firmly in writing or get an attorney involved — but the back-and-forth negotiating is not helping you.