ICBC and Compulsory Coverage (12:X)

The IVA makes ICBC the sole provider of basic insurance for non-exempt vehicles in BC Exempt vehicles are described in ss 43 – 44 of the IVA and also in s 2 of the IVR. For most vehicles owned, leased or operated in BC, third party liability coverage up to $200,000 is only available from ICBC. Full coverage for exempt vehicles, extended coverage in excess of the basic coverage (third party liability insurance over $200,000, IVR, s 67), and collision (“own damage”) insurance may be purchased from either ICBC or from private insurers. See Section III: Optional Insurance. Note that private insurers may have their own requirement for coverage that may be above and beyond the requirements of ICBC.

Vehicles licensed in BC are required by law to carry basic compulsory coverage, which is evidenced by a certificate of automobile insurance issued under the IVA to someone licensed under the MVA (i.e. the “insured”).

NOTE: The definition of “the insured” varies somewhat from section to section in the IVA and IVR.

Driving while uninsured is an offence (MVA, s 24(3)(a)) which carries a maximum penalty of a fine of up to $250 and/or imprisonment of up to three months (MVA, s 24(5)(a)). Driving an uninsured vehicle is also an offence (MVA, s 24(3)(b)) which carries a fine of at least $300 and no more than $2,000 and/or imprisonment for at least seven days and no more than six months (MVA, s 24(5)(b)).

A. Scope of Coverage

Subject to various limitations and exclusions, basic compulsory coverage is set out in the IVR and provides the insured with:

• indemnity for third party legal liability (Part 6);
• accident benefits; no-fault benefits payable for death or injury (Part 7);
• coverage for damages caused by uninsured or unidentified motorists (Part 8);
• first party coverage (Part 10);
• inverse liability (Division 1 of Part 10); and
• underinsured motorist protection (UMP) (Division 2 of Part 10).

B. Third Party Legal Liability: Part 6 of the IVR

1. Indemnity

This insurance indemnifies the insured against liability imposed on the insured by law for the injury or death of another, and/or loss or damage to another’s property, to a total limit of $200,000 (IVR, s 67), to be shared among the victims of a motor vehicle accident (Schedule 3, s 1). The base limit of liability is $500,000 in claims made for a bus, and $300,000 in claims made for a taxi or limousine. Extended Third Party Legal Liability coverage may be purchased at the insured’s discretion. (See Section III: Optional Insurance). If the insured is found legally liable, and no extended coverage has been purchased, he or she is responsible for payment of any claims in excess of the above limits.

2. Who is Covered

The definitions of “insured” for this part of the IVR may be found in IVR, s 63. For our purposes, the most relevant definitions of “insured” are:

• a) a person named in an owner’ s certificate; or
• b) an individual who operates the vehicle described in the owner’s certificate with the consent of the owner; or
• c) an individual who operates the vehicle described in the owner’s certificate while being a member of the owner’s household.

3. Extension of Indemnity

According to IVR, s 65, indemnity is extended to an insured who operates a motor vehicle not described in an owner’s certificate issued to the insured (i.e. someone else’s car). For the purposes of s 65 only, “insured” includes the following:

• a) a person named as an owner in an owner’s certificate;
• b) a member of the owner’s household;
• c) an employee or partner of the owner, where their regular use of the vehicle described in the owner’s certificate is provided for; and
• d) the spouse of an employee or partner described in paragraph (c) where the spouse resides with the employee or partner.

Note that, absent this expanded definition, “insured” would not otherwise cover a member of the insured’s household operating a vehicle not described in an owner’s certificate issued to the insured.

4. Restrictions on Indemnity

Section 65(2) of the IVR states that if an insured is operating a motor vehicle that is not described in an owner’s certificate issued to him or her, indemnity is not extended to the insured if:

• the insured is operating the motor vehicle in connection with the business of a garage service operator;
• the motor vehicle is owned or regularly operated by the insured;
• the motor vehicle is used for carrying passengers for compensation or hire or for commercial use;
• the motor vehicle is in fact not licensed under the MVA (or similar legislation) and the insured does not have reasonable grounds to believe the motor vehicle is licensed; or
• the insured is operating the vehicle without the consent of the owner and does not have reasonable grounds to believe that he has the consent of the owner.

Section 77 provides, in part, that an owner seeking to rely on the coverage provided for a vehicle not named in the owner's certificate cannot do so if he or she also owns (or leases) the non-described vehicle that has been involved in the accident (i.e. you cannot just insure one vehicle and expect this to cover all of the other vehicles in your fleet).

Neither garage service operators nor their employees are covered by the owner’s certificate issued for customers’ vehicles while the vehicle is in the care, custody, or control of the garage service operator or his or her employee for a purpose relating to the business. “Garage service operator” is defined in Part 1 of the IVR as “the operator of a motor vehicle service facility and includes a dealer, service station operator, motor vehicle repairman, auto body shop repairman, wrecker operator, and the operator of a vehicle parking or storage facility” (s 57). To offset the effect of s 57, the garage service operator must obtain special coverage pursuant to s 150.

5. What is Covered

In addition to the legal liability coverage (i.e. s 65 indemnification) outlined above, IVR ss 67 and 69 states that ICBC may also pay for:

• a) “reasonable” emergency medical aid, so long as reimbursement is not provided to the insured by another insurer or under another Part;
• b) emergency equipment or supplies provided to the insured (i.e. fire extinguishers, jacks or other necessary emergency equipment or supplies);
• c) all or some (depending upon the circumstances) of the costs taxed against the insured in an action, in accordance with the British Columbia Supreme Court Rules, BC Reg 221/90 for aggregated general and specific damages; and
• d) the pre-judgment interest under the Court Order Interest Act, RSBC 1996, c 79 or analogous legislation of another jurisdiction on that part of the judgment, and pay post-judgment interest under the Interest Act, RSC 1985, c I-15 or analogous legislation of another jurisdiction on that part of the judgment, both within the limits set out in s 1 of Schedule 3 (IVR).

6. What is Not Covered

ICBC will not indemnify an insured for certain types of damage, including:

• loss or damage to property carried in or on a vehicle owned, rented or in the care, custody or control of an insured (s 72.1); or
• liability directly or indirectly arising out of the operation of attached equipment i.e. machinery or equipment that is mounted on or attached to the vehicle, and which is not required for the safe operation of that vehicle) at a site where such equipment is operated, unless the attached equipment is used in accordance with the IVR (s 72(2)); or
• under Part 4, 6, 7, or 10 in respect of injury, death, loss or damage arising out of radioactive, toxic, explosive or other hazardous properties of prescribed substances under the Atomic Entergy Contract Act (IVR, s 56(1)(a)); or
• under IVA, s 20 (uninsured vehicles), s 24 (hit and run accidents), s 49.3 (default of premiums), Part 7 or Part 10 in respect of any injury, death, loss or damage arising, directly or indirectly out of a declared or undeclared war or insurrection, rebellion or revolution (IVR, s 56(1)(b))
• under IVA, s 20, s 24, s 49, s 49.3(1)(b), Part 6 or Part 10 in respect of punitive or exemplary damages or other similar non-compensatory damages (IVR, s 56(1)(c)).
• a general or special assessment, penalty or premium, payable under the Workers’ Compensation Act or similar Act (IVR, s 72.1(1)(a)).

7. Duties of the Insured

An insured has a duty to report to ICBC mid-term changes, as required by s 9 of the IVR. These changes may result in an increase or decrease in the premiums paid to ICBC. The insured named in the owner’s certificate is obligated to report to an ICBC agent the following:

• a) any change in the insured’s address within 10 days after the change;
• b) any acquisition of a substitute vehicle for the vehicle described in the certificate within 10 days after the acquisition;
• c) any anticipated change in the use of the vehicle described in the certificate to a use to which a different insurance rate applies before such a change;
• d) any anticipated change in the territory in which the vehicle described in the certificate is principally used before such a change; and/or
• e) any change in the location of where the insured vehicle is primarily located when not in use, within 30 days of the change, if the premium for the vehicle is established on the basis of this location, unless the vehicle is used for vacation purposes.

Furthermore, ICBC is not liable to indemnify an insured who, to the prejudice of ICBC, fails to comply with duties outlined in s 73 of the IVR. This section states that an insured:

• a) must promptly give ICBC written notice of any claim made for the accident, including any other insurance held by him or her providing coverage for the accident;
• b) must help secure evidence and information and the attendance of any witnesses;
• c) must cooperate with ICBC in the defence of any action or proceeding, or appeal, taken by ICBC on behalf of the insured;
• d) must allow ICBC to inspect an insured vehicle at any reasonable time;
• e) must, on receipt of a claim, legal document or correspondence relating to a claim, immediately send a copy to ICBC;
• f) must not voluntarily assume liability or settle any claim except at his or her own cost; and
• g) must not fail to cooperate with ICBC in the investigation, settlement or defence of a claim or action.

8. Duties of the Corporation

On receipt of a notice of a claim under Part 6 of the IVR, ICBC must, at its expense, assist the insured by investigating and negotiating a settlement where in its opinion such assistance is necessary, and defend the insured against any action for damages (s 74).

9. Rights of the Corporation

Upon assuming the defence of an action for damages brought against an insured, ICBC has the right, subject to section 79 of the Act, to the exclusive conduct and control of the defence. This right includes, but is not limited to, the right to appoint and instruct counsel, to admit liability, to negotiate, and/or settle out of court (IVR, s 74.1).

10. Forfeiture of Claims and Relief from Forfeiture

Certain conduct by the insured or applicant can result in “forfeiture”, whereby the insured is deemed to have given up his or her right to be indemnified by ICBC. In this situation, the claim for indemnification becomes invalid. Apart from exclusions, a claim may be forfeited under s 75 of the IVA if:

• a) an applicant for coverage falsely describes the vehicle for which the application is made to the prejudice of the insurer (s 75(a)(i));
• b) an applicant for coverage knowingly misrepresents or fails to disclose a fact that was required to be stated in the application (s 75(a)(ii));
• c) an insured violates a term or condition of or commits a fraud in relation to the plan or the OIC (s 75(b); see Section II.B.11. Breaches of Conditions and Consequences;
• d) an insured makes a “wilfully false statement” with respect to a claim under a plan of insurance (s 75(c)).

NOTE: According to Brooks v ICBC (1994), 89 BCL.R. (2d) 215 (S.C), per Bouck J, the purpose of s 19(1)(e) (now IVA, s 75(c)) is to prevent intentionally deceitful misstatements for the purpose of defrauding the insurer; “exaggerated guesses” by an insured as to the value of a lost motor vehicle, or figures inserted for the purpose of goading an insurer into action, are insufficient to deny coverage unless a fraudulent purpose on the part of the insured is shown.

However, ICBC may relieve the insured from forfeiture under s 75 if said forfeiture would be “inequitable”. Furthermore, ICBC must relieve an insured from forfeiture if: a) it is equitable to do so, and b) the insured dies or suffers a loss of mind or bodily function that renders the insured permanently incapable of engaging in any occupation for wages or profit (IVA, s 19(3)).

Because there are various definitions of “insured” in the IMVAR (and IVR), the only reasonable interpretation of s 19 (the relief of forfeiture provision discussed above) is that it is to be read broadly to include all of the definitions: see Khatkar v ICBC (1993), 25 CCL.I. (2d) 243 (BC Prov. Ct.), per Stansfield Prov. Ct. J.

11. Breach of Conditions and Consequences

Insured persons must be careful to abide by the terms and conditions of their plans and OICs. Coverage may be lost if an insured breaches certain conditions, including, but not limited to:

• a) failing to comply with s 73 of the IVR, to the prejudice of ICBC (See Section II.B.7. Duty of Insured);
• b) operating a vehicle when not authorized and/or not qualified to do so (IVR, s 55(3)(a));
  • NOTE: “Occasionally” using a vehicle to go to and from work when a vehicle is insured only for pleasure use is permissible under s 55(2) of the IVR. But, ICBC has ways to determine whether or not the insured has more than occasionally breached such a condition. If a change of use is contemplated, additional coverage should be bought.
• c) using the vehicle in illicit trades, racing, or avoiding arrest or other police action (IVR,s 55(3)(b), (c) and (d));
• d) towing an unregistered and/or unlicensed trailer (IVR, s 55(4));
• e) using the vehicle for a different purpose than the one declared by the insured in his or her application for insurance, except as “occasionally” permitted (IVR, s 55(2(a)); or
• f) naming in the owner’s certificate someone as the principal operator of the insured vehicle who is not actually the principle operator (IVR, s 75).

NOTE: When the court determines who the principle driver is, it will consider the entire period covered by the insurance plan: see Dehm v ICBC (1982), 32 BCL.R. 23.

Despite any breach of condition by an insured, insurance money is still payable to third parties by ICBC in cases where the insured person was:

• a) incapable of properly controlling the vehicle because of the influence of alcohol or drugs;
• b) convicted under any one of the following sections of the Criminal Code, RSC 1985, c C-46 (see also MVA Regulations, s 28.02 Table 4):
  • s 220 (criminal negligence causing death); s 221 (criminal negligence causing bodily harm); s 236 (manslaughter); s 249 (dangerous operation of a motor vehicle); s 252 (failure to stop at an accident), s 253 (driving while impaired or with a blood-alcohol level exceeding 80 milligrams per 100 millilitres); s 254(5) (refusal or failure to give a breath sample); s 255 (impaired driving causing bodily harm or death); s 259 (4): driving while disqualified; or a conviction under the Youth Criminal Justice Act (Canada) for any of the above offences; or “similar result” or conviction of these offences in a jurisdiction in the U.S.;
  • conviction under ss 95 or 102 of the MVA or similar convictions under another Canadian or American jurisdiction (both concern driving while prohibited); or
• c) permitting another person to use the insured vehicle in way that results in a conviction for any of the offences outlined above (IMVA Regulations, s 55).

12. Making a Claim Under Part 6: Procedural Steps and Considerations

a) Limitation Period

Section 76 of the IVR provides that any action started to enforce third-party liability for bodily injury and/or property damage (i.e. claims made under Part 6 of the IVR) must comply with the Limitation Act. Section 3(2)(a) of the Limitation Act provides a two-year limitation period for actions for damages related to injuries to a person and/or property, including negligence claims against the driver and/or the owner of the vehicle driven.

Minors are not subject to a limitation period (Limitation Act, s 7). After the minor has reached age 19, s 3(2)(a) begins to apply and the two year limitation period commences. However, if the minor’s guardian/etc receives a Notice to Proceed, the limitation period is initiated notwithstanding the minor status (Limitation Act, s 7(6)). The Notice to Proceed must meet the requirements of the Limitation Act ss 7(7)(a-g).

b) Duties Outlined in Section 73 of the IVR

An insured must comply with s 73 of the IVR. Failure to do so may result in a claim being denied. See Section II.B.7. Duties of the Insured.

c) Service on ICBC

A claimant who starts an action for damages caused by a motor vehicle or trailer must also serve ICBC with a copy of the Notice of Civil Claim the same way the defendant is served and must also file proof of service in the court in which the action is started. No further step in the action can be taken until eight days after filing of the service in court (IVA, s 22).

d) Information and Evidence

ICBC has a broad right to compel the insured and others to provide information set out in the IVA. Specific types of information that ICBC can demand are noted in s 11 (combined forms and information); s 27 (accident report); s 28 (medical reports); s 29 (employers’ reports); and s 30 (superintendent’s records).

According to McKnight v General Casualty Insurance, [1931] 2 W.W.R. 315 (BCCA.), an insured need not provide information or evidence to an insurance company respecting a breach if the company is contemplating using such a breach to deny coverage to the insured. This is not considered to be refusing to cooperate with the insurer in the defence of the action. However, the insured may still have to provide information regarding the accident itself.

C. Accident (“No Fault”) Benefits: Part 7 of the IVR

1. What are “No Fault” Benefits?

Regardless of who is at fault in an accident, ICBC pays benefits for injuries to the occupants of a licensed vehicle and pedestrians and cyclists injured by a vehicle described in any owner’ s certificate. The accident benefits, commonly called “no fault” benefits, are payable to an insured for death or injury caused by an accident arising out of the owner’ s ownership, use, or operation of a vehicle in Canada or, with some restrictions, in the U.S.(IVR, s 79(1)). In Amosv ICBC, [1995] 3 S.CR. 405, the Supreme Court of Canada laid out a two-part test for determining if death or injury falls within the scope of s 79(1). The following must be met: a)the accident must result from the ordinary and well-known activities to which automobiles are put; and b)there must be some nexus or causal relationship (not necessarily a direct or proximate causal relationship) between the plaintiff’ s injuries and the owner’ s ownership, use, or operation of his or her vehicle. That is, the connection between the injuries and the ownership, use, or operation of the vehicle must not be merely incidental or fortuitous. Amos reversed the BC Court of Appeal judgment and held that the plaintiff’ s injuries were causally connected to the ownership and use of his vehicle. The plaintiff was shot while driving away from a gang who was trying to gain entry into his motor vehicle. However, Major J. noted that if the gunshots had been truly random and not causally connected to the plaintiff’ s ownership of the vehicle then his injuries would not have been covered under s 79(1). 2.Who is Covered? Section 78 of the IVR contains a definition of "insured", which includes, in part: a person named as an owner in an owner's certificate; a household member of a person named in an owner's certificate; an occupant of a vehicle that is licensed in BC and is not exempted under section 43 of the IVA (vehicles from the federal or a provincial government other than BC); any occupant of a vehicle that is not required to be licensed in BC, but is operated by a person named in a driver's certificate; a cyclist or pedestrian who collides with a vehicle described in an owner's certificate; a BC resident who is entitled to bring an action for injury or death under section 20 (uninsured vehicles) or 24 (remedy for hit and run accidents) of the IVA; or