Neighbor's basement flooded - need insurance help

[Raza Rizvi]

Hello, Need the advice of this board.

My sewer backed up into my unfinished basement. I got the drain snaked and it drained the water. The issue is that some water seeped into my neighbor's finished dug out basement. I did find out that his basement was finished without permits. He is saying that he will involve his insurance company or if we could work out a deal and I can pay him five grand. What should I do? Pay or let his insurance come after mine?

Any advice would be appreciated.