Do you know that you can lose your ICBC coverage – even though your premiums are fully paid?

Payment apart, the insurance contract between you and ICBC contains several conditions that you must honour. If ICBC concludes that any of the conditions have been broken (or “breached”), ICBC can deny coverage.

Say you were at fault in a car accident. The other driver was injured and sues you for compensation. ICBC could refuse to provide a lawyer to defend the claim against you. Also, if ICBC pays out money to that person, ICBC can later sue you to recover that money.

Here’s an example. Mr. K, the insured, had a Class 5L learner’s licence when he was involved in an accident. He was driving without a qualified accompanying passenger, as required by his licence. He initially told police and the ICBC adjuster when reporting the claim that he was alone in his vehicle. A month later, he told ICBC that he was accompanied by his girlfriend.

The BC Supreme Court said Mr. K was in breach of his insurance policy for driving without a qualified accompanying passenger and making a wilfully false statement. He had to re-pay ICBC the $36,613.63 that ICBC paid out under his liability insurance.

That wasn’t all. Before trial, ICBC had offered to settle with Mr. K and accept $33,000 from him as reimbursement. He refused, though he generally knew what ICBC witnesses would say, and insisted on going through with a four-day trial. As a result, the court slapped Mr. K with “double costs” – meaning he had to pay ICBC twice their legal and court costs (according to a prescribed schedule of fees). This judgment of double costs added significantly to the financial burden of the existing judgment of $36,613.63 against him.

But that burden can be far, far worse. Personal injury judgments can run to hundreds of thousands of dollars, or in tragic cases, several million dollars.

ICBC can deny coverage for several reasons. Two conditions, in particular, cause grief for many insured people. One is where ICBC believes the driver was sufficiently impaired due to alcohol. The other is where (to save premiums), the insured person makes a false declaration on the insurance application form about who the principal operator will be or about the main use of the vehicle (for example, says the use is for pleasure, rather than to drive to and from work).

In the first case, ICBC doesn’t need a drunk driving conviction to succeed in denying coverage. They only need enough evidence to show, on balance, that the driver was incapable of properly controlling the vehicle due to drinking alcohol. The test for this is whether the accident could have been avoided if the driver had been sober.

If you get notice that ICBC denies or may deny coverage, or if you are injured in a car accident, you should contact a lawyer promptly to determine your rights.

Janice Mucalov, LL.B. for Gertsoyg & Company. This column provides information only and must not be relied on for legal advice. Please call Gertsoyg & Company at (604) 602-3066 for a free legal consultation concerning your particular case.