Yes, however even though this is an obvious defect or problem with the car you should still point it out to any potential buyers just to be on the safe side. Also, any bill of sale you give for the car should mention that the vehicle is being sold "As Is".
I would need to know a little more facts regarding how the Police denied to make a police report. However, you should contact and attorney without delay. You should also do your best to preserve any evidence of the accident i.e. take pictures of the scene and any vehicles involved and of course seek medical attention for any injuries.
The duty to reimburse the insurance company is governed by the language in your insurance policy and by the laws of your State. If you currently have an attorney they should deal with this issue.
If you do not currently have an attorney you should seek the advice of a personal injury attorney.