Assuming you both agree on a $ price, just make sure you document everything.
Easiest & cleanest would be if you just buy the car as Torque mentioned. Slightly more complicated if the other party wants to keep the car since then you just have to make sure the documentation is well done and doesn't allow any wiggle room for him to come back with any further recourse (e.g. Say he didn't initially realize XYZ piece was damaged or as damaged as he thought and wants more).
Is there a particular reason to avoid going insurance? It might not hurt to look into it, and I believe the laws are such that you can't get dinged for calling and discussing the situation. It will only impact her rates if a claim is ultimately filed. If 2 cars were totaled, could be cheaper option even if her rates go up.
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