I would have settled for $1000.
Once I scratched the bumper of a very old car in the parking by accident. The guy asked me for $400, I gave him the next day. Hit someone on the arm is much more serious.
If you have his phone number, you should meet up with him and ask how he is feeling and show that you care, then maybe he will settle for a lesser amount.
It’s not a good idea to go through your insurance for $1000. Because it will cost you a lot more when your insurance premium increases for the next 5-10 years.