I don't employ now but I have done in the past.
Me, I'd sack the bloke straight away. Misuse of company property and or driving in a way that resulted in a written off van to me is gross misconduct.
By his recklessness, he has an accident, which you witnessed, and he expects sick pay? To my mind, he injured himself by his own actions.
I wouldn't even be nice about it or apologetic. He caused this, it going to cost you money and a lot of grief replacing the van quickly and unless he's going to immediately compensate you, sack him.