What Happens after a Breach?

ICBC will offer a relief against forfeiture which means that they will reinstate the insurance if you pay a significant fine

The system allows ICBC’s ruling on the breach to be the “final say” on insurance coverage unless you are successful in overturning the decision through ICBC’s internal review process or can successfully sue ICBC to force them to provide insurance coverage.  ICBC knows that most people will not sue them for coverage and will ignore the situation.

Indeed, most individuals that are breached of their contract of insurance simply do nothing and then the two-year limitation period after the denial passes by making ICBC’s decision final and largely untouchable.

On occasion, ICBC will offer a relief against forfeiture which means that they will reinstate the insurance if you pay a significant fine. On first blush, you may think that the fine is excessive because it is usually 10 times the amount of premiums that you saved by insuring your vehicle incorrectly. However, the alternative is to allow the breach to stand and you then must fight ICBC in Court to reinstate your insurance policy. The expense of running a lawsuit is almost certain to vastly outweigh the fine. In addition, if you allow the breach to remain in place, the debt that ICBC will put on your driver’s license almost always exceeds the fine.

Assuming the breach of the contract of insurance stands, the next thing that happens is ICBC sends a demand letter to the breached insured after the claim has been settled with any third parties. The demand letter could be years later and will ask the breached motorist to pay back all the money ICBC paid for vehicle damage, personal injuries, etc. If the motorist doesn’t pay immediately, ICBC will aggressively pursue repayment.

The breached motorist also has little chance to dispute the amount ICBC pays out on the claim, yet it becomes a debt of the motorist. In other words, ICBC has no obligation to prove that the money they have allocated against you as your debt on your driver’s license is fair and accurate.

Don’t think for a moment that you can ignore this demand for payment. If you don’t pay, ICBC will likely take away your driver’s license or your insurance and even start collection proceedings against you.

The reason being, the government has given ICBC very powerful collection abilities.  ICBC doesn’t have to prove the size of the debt nor sue you for the debt.  They can simply eliminate your opportunity to drive in the Province of British Columbia until you pay up. Clearly, this ability to limit your driving in British Columbia is a significant collection power.

If faced with the demand letter, you need to consider overturning the ICBC decision on the breach of insurance if it is wrong.  The only way to do so is to fight the matter in Court. The problem though is that you have two years from the denial of the insurance coverage to sue and often, the demand for payment that is sent to you is years later.

If there is no hope to avoid the breach of the contract of insurance, you need to find a way to pay this debt or negotiate a lower amount with ICBC.  In the past, ICBC has been willing to accept partial monthly payments of the debt but in recent times, they have not been as generous because the collection department has a mandate to be very aggressive.

In summary, when ICBC sends you a demand for payment, this is a very serious matter. You won’t be able to ignore them because they are very aggressive in their collection methods to the point of taking away your driver’s license and insurance if you don’t pay up.