When I am Sued because of a Motor Vehicle Accident

The minimum limits you receive through ICBC are $200,000 coverage for damages you cause to others in an accident

As part of your insurance coverage with ICBC, you get what is called Third Party liability coverage.  The minimum limits you receive through ICBC are $200,000 coverage for damages you cause to others in an accident.  You also get access to an ICBC appointed lawyer.

You may use a non-ICBC insurance company to increase the basic limits on Third Party liability coverage or you can use ICBC.  As the size of claims arising out of accidents can potentially reach into the millions of dollars, the more Third-Party liability coverage, the better off you are. The reason for this coverage is that if you are sued for damages by another party and you are responsible for the accident, in whole or in part, ICBC will only pay a settlement or judgment against you to the maximum of your Third-Party liability insurance limits. You are personally responsible to pay any excess.

When you receive a lawsuit (Notice of Civil Claim) against you for a motor vehicle accident, do not panic.  The best plan of action is to contact your adjuster and notify him/her of the lawsuit.  Assuming you have ICBC insurance without any breach, ICBC will take care of everything from that point on.  The steps you may be involved in include getting interviewed by the defence lawyer/adjuster, attending an Examination for Discovery to answer questions by the Plaintiff lawyer and/or attending a trial. Remember, full cooperation with the ICBC adjuster and your defense lawyer is essential as to do otherwise means that ICBC can breach you of the contract of insurance. A breach, in turn, would mean you have to pay the entire claim out of your own pocket.

In a situation where you are told by the defense lawyer the claims from the motor vehicle accident may exceed your policy limits, it is recommended that you consult a lawyer about the prospect of personal exposure to a judgment more than the policy limits.  At the very least, your lawyer should be encouraging ICBC to try to settle the claim within the policy limits, so that you are not personally exposed to any excess judgment.  A good lawyer will set up what is called a “bad faith claim” against ICBC.  A bad faith claim is where ICBC does not keep your best interests in mind when they are trying to defend a claim and therefore, personally exposes you to the excess judgment.

If ICBC is denying you coverage for various reasons such as impaired driving, a principal operator breach, failure to cooperate, a false statement, etc.… do not simply ignore ICBC’s denial of coverage, especially if you are responsible for the accident and you caused injuries to someone. The reason being, ICBC may defend the claims being advanced against you and may pay out the judgment or settlement but they will then look to you for reimbursement at the end of the claim. You will receive a letter from ICBC years after the accident saying you owe $X and if you don’t pay them back immediately, they will take away your driver’s license and/or ICBC insurance. By then, you have no grounds to dispute the ICBC debt.

The best thing to do is hire a lawyer and dispute ICBC’s denial of coverage unless there is no hope of getting insurance coverage. This is particularly so if the potential claim against you are very large.

Remember, if ICBC denies coverage, they administer the claims on the assumption there is no coverage and go after you for the amount they paid out under the claims. You have a positive obligation to establish coverage under the ICBC policy and you only have a two-year limitation period to sue ICBC over their decision to deny. In a breach situation, any pay-out by ICBC automatically becomes a debt against you which you need to pay back to ICBC unless you no longer wish to drive or insure a vehicle in British Columbia.

In summary, so long as you have ICBC insurance coverage, in most situations ICBC will take care of defending any lawsuit against you and paying out any judgment up to the maximum of the Third-Party liability policy limits. They will appoint a lawyer to defend you.  Your involvement in the case is probably going to be quite minimal.