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Breach of Insurance

Every insured has a duty to deal with ICBC in good faith. If this duty of good faith is not met ICBC may have grounds to deny benefits that would otherwise be owing pursuant to a contract of insurance. This denial of benefits is commonly called a “breach of policy”.

How Is a Policy Breached?

Insurance breaches can occur in a number of ways. Under section 19 of the Insurance (Vehicle) Act, insurance breaches occur in the following ways:

1. an applicant for an owner’s certificate, to the prejudice of ICBC, has falsely described the motor vehicle or trailer
2. an applicant for an owner’s certificate or driver’s certificate knowingly misrepresents or fails to disclose in the application a fact required to be stated in it
3. an insured violates a term or condition of the plan - some examples of a breach under this section include operating a vehicle for a criminal purpose, engaging in street racing and operating a vehicle while impaired by drugs or alcohol.
4. an insured commits a fraud in respect of the Insurance (Vehicle) Act
5. an insured makes a willfully false statement with respect to a claim

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What Are the Consequences of a Breach of Policy?

There can be serious consequences to a breach of policy. Being in breach may:

1. lose your right to claim Part 7 benefits,
2. lose your right to have your accident-related vehicle repairs paid for by ICBC,
3. lose your right to have ICBC defend you in a lawsuit for damages as a result of a collision,
4. lose your right to have ICBC indemnify you for any court judgment against you or settlement paid out as a result of your negligence.

This means that not only can you lose your insurance benefits, you may ultimately have to pay the costs of a court judgment or settlement for the injuries/damages caused in a collision. In the most serious cases this can result in millions of dollars of personal exposure!

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What Do I Do If ICBC Holds Me In Breach?

If ICBC determines that a breach of policy exists there are things that can be done.

Firstly, it is important to determine if ICBC’s decision was correct. The facts surrounding their decision must be scrutinized carefully. Assuming ICBC relied on incorrect or incomplete facts in coming to their conclusion, it may be possible to persuade ICBC to re-evaluate their decision.

It is important to know that ultimately, a court has the right to decide whether a person is in breach of their insurance, not ICBC. A court can also decide that even if a person is in breach of their insurance in certain circumstances it would be unjust for them to have their insurance benefits forfeited. This is known as “relief from forfeiture”. There are important limitation periods in bringing these claims to court and it is important to obtain legal advice with respect to these limitations as soon as ICBC advises you that there is a breach of policy.

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