ICBC denies coverage for totalled sports car
A Burnaby family is out tens of thousands of dollars after ICBC denied it coverage for a totalled sports car because it misrepresented who would be the car's principal operator.
Yu Jung Lau and Victa Wei Lau sued ICBC for coverage but lost in a recent B.C. Supreme Court judgment.
Justice Frits Verhoeven said in his reasons for judgment that he concluded "with considerable reluctance" that the principal operator was misrepresented because the decision "was made in order to save a relatively modest amount of insurance premium, and almost certainly without any real appreciation that forfeiture of the insurance could result, with dire financial consequences.
"The result is harsh for the plaintiffs."
Not only is the family on the hook for the cost of the car, but ICBC determined Victa Lau, then 22, to be solely at fault in his accident with another vehicle, and the claims by the occupants of that vehicle remain unresolved.
Yu Jung Lau is an autobody repairman who immigrated from China 31 years ago. His wife operates a convenience store in Burnaby where the family lives above the business. They have three sons, with Victa being the eldest.
In 2009, the family already owned four vehicles, a 2005 Lexus RX330, a 2000 Toyota Corolla, a Volvo 850 and a Ford van. Only the Lexus and Toyota were insured at the time because they couldn't afford to insure them all.
Yu Jung Lau testified he saw a newspaper ad for a 2005 Subaru Impreza WRX STI and after Victa checked it out, the parents agreed to support the purchase, paying a total of $7,000 in partial and down payments for the car, with their son agreeing to make the $657 monthly payments.
They purchased six months of insurance coverage, and the father was named principal operator which, considering Victa was licenced as a novice driver at the time, would have saved them $380 on the premium.
Victa made three payments on the sports car, which cost $41,287, before it was totalled in a crash in Burnaby just over two months later on Dec. 28, 2009.
While Yu Jung Lau testified he drove the Subaru the most, Victa said in his written statement to ICBC that he was the principal operator. Victa said the same thing to the ICBC adjuster handling the file both on the telephone and in person when they met.
"On the other hand, in his examination for discovery, Victa Lau testified he only drove the Subaru to church on Sundays, and on special occasions, or to run errands for his mother in connection with the store."
And while the father said he was the one that wanted the car, his testimony about the reasons were "unconvincing," particularly as he had trouble recalling much detail about it.
The Subaru "was an expensive, high performance vehicle, with 300 horsepower, a very prominent spoiler on the trunk and a large air intake scoop on the hood," Verhoeven said. "This is the kind of car that would certainly appeal to a young man."
Yu Jung Lau's rationale for his son making the car payments also did not make sense, the judge said.
"Victa could contribute to the family finances or pay room and board without his father buying an expensive high performance car that the family did not need."
And Victa was the one that took delivery of the car when it was bought because his father was too busy.
"Victa Lau's Facebook postings reveal that he demonstrated great pride in the car among his friends," the judge said. "All of this is consistent with the car being obtained primarily for his use."
Verhoeven found Yu Jung Lau knowingly misrepresented who the intended principal operator was and therefore forfeited his insurance coverage. He dismissed the Lau family's case, with ICBC entitled to court costs.
"Judging by the number of similar cases that have come before the courts, it seems likely the plaintiffs' lack of understanding of the consequences of a false declaration as to the vehicle's intended principal operator is shared with many members of the public," Verhoeven said. "The result in this case should serve as a warning."