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And it sounds like there's a good argument that they shouldn't really be driving any more.
Well, if that's so, that's a decision for them to make. Pressure to stop driving often comes from within the family. It's likely that driving is their form of mobility, so shouldn't be taken away so lightly.
Yeah that's a fair argument - she claimed she "didn't see me" but I was traveling in a straight line for several hundred metres before the intersection and I was wearing a bright red jersey on a green and purple bike so that's pretty worrying.
I don't think it's a fair argument based on just one crash. Thousands of much younger drivers say the same thing all the time. It's in all probability not down to age, but driver inattention is quite simply one of the most frequent causes of crashes. The main issue with older people can be their eyesight. It's an ageist myth that older drivers are particularly dangerous--most crashes are caused by younger drivers.
It may feel mean to set a solicitor on them but it's their insurance that will be paying out. And it sounds like there's a good argument that they shouldn't really be driving any more.