Canada: No Fault Insurance For Auto Accidents In British Columbia

Recent legislative changes in British Columbia have introduced a no fault model for auto liability claims arising from motor vehicle accidents that occur in British Columbia on or after May 1, 2021. The changes have significant implications for out-of-province auto insurers.

Summary of no fault in British Columbia

Amendments to the British Columbia Insurance (Vehicle) Act  [RSBC 1996] Ch 231 (the "I(V)A") remove the right of an individual to sue for personal injuries and vehicle damage caused by a motor vehicle accident in British Columbia on or after May 1, 2021 in all but very limited circumstances.

Coinciding with these changes are significantly increased statutory first party accident benefits for medical, rehabilitation and income replacement benefits as well as new benefits for non-earners, caregivers and permanent impairment compensation for those with a permanent impairment or a catastrophic injury.

Personal injury actions

A person cannot sue for personal injuries and associated losses caused by a vehicle in British Columbia on or after May 1, 2021 unless an exception applies¹.

Personal injury actions can still be pursued against:

1. Vehicle or parts manufacturers, sellers and suppliers;
2. Garage service operators;
3. Liquor licensees; and
4. Persons convicted of prescribed criminal offences arising from their use and operation of a vehicle².

Additionally, personal injury actions may still be pursued if all vehicles involved in the accident are non-standard motor vehicles that cannot be licensed in British Columbia.

Vehicle damage actions

A person cannot sue for vehicle damage and associated losses caused by a vehicle in British Columbia on or after May 1, 2021 unless an exception applies³.

Actions by owners or lessors against renters or lessees are exempt from the bar to vehicle damage actions.

Additionally, vehicle damage actions may still be pursued if all vehicles involved in the accident are non-standard motor vehicles that cannot be licensed in British Columbia.

The bar on vehicle damage actions precludes subrogated claims by an insurer for vehicle damage paid to an insured.

Other third party liability claims

There is no bar to third party claims for losses, other than personal injuries and vehicle damage arising out of a motor vehicle accident on or after May 1, 2021. Examples of claims not subject to the bar include:

1. Non-vehicle property damage caused by a motor vehicle accident (e.g. damage to fencing, buildings or other property);
2. Damage to vehicle contents;
3. Downtime; and
4. Environmental cleanup claims.

BC government subrogated healthcare claims

The British Columbia Ministry of Health was previously entitled to pursue subrogated claims against drivers and owners of vehicles responsible for injuring someone covered by the British Columbia provincial government healthcare plan for the cost of the healthcare services received as result of injuries sustained in an accident. The amendments to the I(V)A prevent the British Columbia government from pursuing subrogated claims for the cost of healthcare services incurred as a result of  motor vehicle accidents occurring on or after May 1, 2021.

However, the provisions of the Health Care Costs Recovery Act [SBC 2008] Ch 27 ("HCCRA") still apply to accidents occurring on or after May 1, 2021. Auto insurers are still required by the HCCRA to notify the British Columbia Ministry of Health within 60 days of learning of an act or omission by one of their insureds that may have caused or contributed to the personal injury or death of a beneficiary of the British Columbia healthcare plan⁴ and of the proposed settlement terms before any third party claim is settled on behalf of an insured⁵.

First party accident benefit entitlement

Out-of-province auto insurers can expect a significant reduction in the third party tort claims pursued against policyholders arising from accidents in British Columbia on or after May 1, 2021 as a result of the amendments to the I(V)A. However, insurers may experience an increase in claims made by insureds for first party accident benefits arising from accidents in British Columbia on or after May 1, 2021.

Out-of-province auto insurers may be required to pay Accident Benefit coverage to the mandatory minimum limits in British Columbia, whether or not the policy wording provides any First Party Personal Injury Protection ("PIP") coverage or not. This can arise where:

1. The jurisdiction in which the policy was issued has enacted legislation requiring auto insurers to reform their policies to accord with the laws of the jurisdiction in which the accident occurred;
2. If the insurer has been issued a Business Authorization in British Columbia, which contains the requirement that all coverages be reformed as a condition of doing business in British Columbia;
3. The policy contains a provision that requires the insurer to pay higher benefits where required to do so by local laws of the place where the accident occurs; or
4. If the insurer has filed a Canada Non-Resident Inter-Province Motor Vehicle Liability Insurance Powers of Attorney and Undertaking in the new form introduced in 1988.

If any of the foregoing apply, insureds from out-of-province who are involved in motor vehicle accidents in British Columbia are entitled to Accident Benefits up to the prescribed British Columbia minimum limits, whether the insured has purchased PIP coverage or not.

Priority of coverage

A driver, and any passenger(s) in their vehicle, may be entitled to Accident Benefit coverage from ICBC for motor vehicle accidents occurring in British Columbia on or after May 1, 2021 even if they are not a British Columbia resident or an ICBC policyholder.

However, ICBC coverage is secondary to any other applicable insurance policies to the extent of the alternative coverage available. If a person is entitled to Accident Benefits under an auto insurance policy issued by an out-of-province insurer, that coverage is primary with respect to Accident Benefits to which they are entitled regardless of whether they are also entitled to Accident Benefits from ICBC⁶.

BC's new minimum accident benefits

First party Accident Benefits coverage has been significantly increased for motor vehicle accidents occurring in British Columbia on or after May 1, 2021. There is now no maximum limit to an insured's Accident Benefits, although there are limits to specific benefits, which are subject to Consumer Price Index adjustments.

The benefits and current coverage limits for accidents on or after May 1, 2021 include:

Medical and Rehabilitation Expenses

An insured who sustains injuries caused by the use or operation of a vehicle is entitled to reasonable and necessary medical, dental and rehabilitation expenses.

The extent of coverage for medical, dental and rehabilitation expenses is set out in both the I(V)R  and the Enhanced Accident Benefits Regulation B.C. Reg. 59/2021.

Personal Care Assistance

Attendant care coverage is provided if the insured's restrictions for activities of daily living meet a minimum threshold of impairment.

Income Replacement Benefit

Under the Income Replacement and Retirement Benefits and Benefits for Students and Minors Regulation B.C. Reg. 60/2021 an Income Replacement Benefit provides coverage of up to 90% of an insured's net income, subject to a maximum yearly insurable income of $100,000.00 CAD, lost as a result of being unable to work due to an accident.

Non Earners

Coverage is available for insureds working without pay for a family business, students who miss school and caregivers.

Permanent Impairment

Insureds who meet the threshold of being permanently impaired or catastrophically injured pursuant to the Permanent Impairment Regulation, BC Reg 61/2021 are entitled to permanent impairment compensation. This is a one-time lump sum payment.

Indemnification for vehicle damage

The I(V)A requires ICBC to indemnify an insured for vehicle damage arising from a motor vehicle accident in British Columbia involving two or more vehicles. If the applicable auto policy is required to provide coverage to the British Columbia minimum first party coverage, an insurer is required to provide indemnity to its insureds to the extent required under the I(V)A.

Indemnification is limited to $200,000.00 CAD by the Basic Vehicle Damage Coverage Regulation, BC Reg 4/2021.

Indemnity is reduced to the extent of the responsibility for the accident of the owner or operator of the insured's vehicle, or another unidentified liable motorist, with the reduction expressed as a percentage.

Dispute resolution

Determinations of entitlement to most benefits paid or payable under the I(V)A are within the exclusive jurisdiction of the British Columbia Civil Resolution Tribunal (the "CRT"). However, claims against insurers for indemnity for vehicle damage under the new provisions are subject to mandatory arbitration.

For policies that are not required to provide BC minimum First Party Accident Benefit coverage, insureds can bring claims against the insurer before the CRT, the Provincial Court of British Columbia or the Supreme Court of British Columbia, depending on the amount of the claim.

Considerations for out-of-province auto insurers

The new amendments to the I(V)A and associated Regulations have barred tort claims arising from motor vehicle accidents in British Columbia on or after May 1, 2021 in all but very limited circumstances. Out-of-province auto insurers can, accordingly, expect a significant reduction in third party claims and lawsuits against insureds arising from motor vehicle accidents in British Columbia.

However, there will probably be an increase in the number of first party claims made by insureds.

Out-of-province auto insurers should be aware of the limited circumstances when tort claims arising from motor vehicle accidents in British Columbia occurring on or after May 1, 2021 may still be pursued against an insured, whether an insured is entitled to enhanced accident benefits to the British Columbia minimum and how to determine entitlement and calculate enhanced accident benefits.

Footnotes

1 I(V)A, Section 115

2 Prescribed offences include: criminal negligence causing death or bodily harm, first or second degree murder, manslaughter, attempted murder, dangerous driving, impaired driving, failure to stop after an accident, evading a police officer and theft of a motor vehicle.

3 I(V)A, Section 172 and 173

4 HCCRA, Section 10

5 HCCRA, Section 13

6 I(V)A, Section 122(2)