Should I file a claim or not?

What is the name of your state (only U.S. law)? FL

My Jeep was damaged by the manager of a body shop in the parking lot of his shop (I was in the shop next door that shares the parking lot). I watched it happen and had 2 other witnesses too. He admitted to causing the damage and said he would fix it. I have no experiance with his shop and I have no idea what quality of work he does. My concern is that if I let him fix it (without getting my insurance involved) I don't think I would have any recourse if he does a crappy job fixing it. But on the other hand if I involve my insurance company I take the chance of my rates rising and quite frankly I can't afford that.

So I don't know what I should do...

Your rates will not go up if you claim an accident that you did not cause. They will pay your claim (less your deductible) and go after the at-fault party to recover (including your deductible usually) so eventually you will get the deductible back, though it could take some time. You could also claim directly on his insurance, which will also let you go to the shop of your choice for repairs.