08 Sep Breaching Your Car Insurance Policy Results in Denial of Insurance Coverage

Normally your car insurance company will defend you if you cause a car accident, and they will pay any settlement reached or judgement awarded against you.  However, if you are in breach of a policy condition of your insurance at the time of the accident, the insurer will deny you coverage.  What this means is that you could be on the hook personally for any damage or injuries you cause.

In the case of Hamman v. Insurance Corporation of British Columbia, 2017 BCSC 831, Mr. Hamman rear-ended a vehicle, which in turn was pushed into the vehicle in front of it.  The driver of the first vehicle rear-ended was injured.

At the time of the accident Mr. Hamman was insured pursuant to an Owner’s Certificate issued by ICBC.  ICBC ultimately denied coverage to Mr. Hamman under the policy.  It took the position that Mr. Hamman was drunk at the time of the accident and that he had breached the policy condition prohibiting operation of a vehicle while “under the influence of intoxicating liquor or a drug or other intoxicating substance to such an extent that the insured is incapable of proper control of the vehicle”.

The driver injured by Mr. Hamman sued Mr. Hamman.  ICBC refused to defend Mr. Hamman because he was in breach of his insurance coverage for drunk driving.  ICBC advised him that he “will be required to repay ICBC for all claims made against [him]” arising from the accident.

Having been denied coverage by ICBC, Mr. Hamman hired his own lawyer to file a response to the lawsuit.  ICBC invoked its rights to be made a third party in the action, which permitted ICBC to defend the injured driver’s claim.  The injured driver’s lawsuit was settled by ICBC in the amount of $212,000.

Shortly thereafter, Mr. Hamman issued a lawsuit against ICBC.  At trial, Mr. Hamman claimed a declaration of insurance coverage in his favour and the dismissal of ICBC’s counterclaim.

At trial, ICBC had to prove a breach of the insurance policy condition in order to deny coverage.  To substantiate the breach, ICBC had to prove each of the following:

(1)      Mr. Hamman was driving the vehicle,

(2)      He was under the influence of alcohol or drugs, and

(3)      So much so that he was incapable of properly controlling the vehicle.

Mr. Hamman testified at trial as to his activities on the day of the accident, including his alcohol consumption and the accident itself.  Evidence was also given by eye witnesses, police officers, an expert forensic chemist and the ICBC claims examiner who handled Mr. Hamman’s file.

The Court noted that the information Mr. Hamman provided to the police, his insurer and the Court was inaccurate, untruthful and incomplete.  The Court had no hesitation in concluding that Mr. Hamman was severely impaired by alcohol at the time of the accident, to such an extent that he was incapable of proper control of his vehicle.  In doing so, he breached the terms and conditions of his insurance policy.

The Court held that ICBC had rightly denied Mr. Hamman’s liability coverage for the accident and dismissed his action.  ICBC’s counterclaim was allowed and damages were awarded to ICBC against Mr. Hamman in the amount of $212,000, plus interest.

If ICBC denies you coverage because they believe you were in breach of a policy condition, call Acheson Sweeney Foley Sahota. During our free consultation, we will advise you as to the strength of your case and options available to you.