I agree with you guys... it's just a very delicate matter as you can well imagine.

I think I say to them (parents), "Thanks for the offer. I don't want you two to have to pay for this. So if the money is coming from you both, then I must refuse." And leave it at that, implications quite obvious. If he doesn't pay me, then I get to eat the cost... and the onus will lie on him forever.

Thanks everyone for helping me think this through rationally. This is something just between me and him, and should not have to burden the rest of the family. Luckily the damage doesn't seem too severe, and is mostly cosmetic (but we'll see after the alignment check).