UMP and the Un(der)insured

Three tiny letters, one big difference


When it comes to British Columbia’s Underinsured Motorist Protection (UMP), three little letters can mean the difference between innocent parties receiving up to $2,000,000 or being limited to $200,000. That difference comes from how awards are granted to persons injured by uninsured, versus underinsured, vehicles.

The purpose of UMP is to “protect an ‘innocent’ claimant who is not able to receive [complete] compensation from liable tortfeasors” (McVea (Guardian ad litem of) v British Columbia (Attorney General), 2005 BCCA 104). Generally, certain individuals injured by an underinsured motorist have access to an UMP amount of $1 million ($2 million with optional insurance). If those same people were injured by an uninsured motorist, however, the procedure is less clear.

On the one hand, an uninsured motorist arguably fits within the definition of an underinsured motorist (Regulation s. 148.1(1)), and so the plaintiff(s) may have recourse to UMP. On the other hand, there is a non-UMP procedure for recovery vis-à-vis uninsured vehicles under the Insurance (Vehicle) Act, s. 20(2). In any case, ICBC liability is limited to $200,000 (Regulation section 105(1); Shapiro v. Dailey, 2011 BCCA 424 at para 15) when an uninsured vehicle is at fault.

More complexity arises when ICBC and the injured party do not agree whether a vehicle was insured at the time of a collision. A major point of contention in this regard is often implied consent: where an owner allows the use of a vehicle, it is likely insured; where it was driven without consent, however, it may be uninsured.

Regulation section 148.2(4) denies UMP compensation to a party that “without the written consent of the [insurance] corporation and to its prejudice, … prosecutes to judgment….” Parties can apply under the Commercial Arbitration Act (Regulation s. 148.2(1)), but only for a determination of their entitlement under UMP, not under the uninsured motorist procedure.

The issue is compounded when the defendant(s) cannot be located. Unfortunately for the plaintiff(s), taking default judgment is probably not an option: the Insurance (Vehicle) Act allows ICBC to rectify a situation in which an uninsured motorist “does or fails to do anything that entitles the claimant to take default proceedings” (s. 20(6)). This measure is presumably meant to prevent uninjured plaintiffs from taking default against their defendant accomplices, but it also creates real problems for innocent plaintiff(s).

Although the initial burden is likely on ICBC to show the vehicle was uninsured, the forum for this argument, and the degree of proof required, is unclear. In certain circumstances, it can be nearly impossible for a plaintiff to attain justice. The normal remedy of seeking default against an uncooperative defendant is probably not available by virtue of section 20(6). At the same time, the defendants are not available to be examined. This puts the plaintiff in the position of having to accept an award limited to $200,000, or somehow locate evidence that the defendant was insured, without conducting examinations for discovery.

All together, when an individual is injured by an allegedly uninsured vehicle, a lack of clarity vis-à-vis uninsured vehicles and UMP shifts the bargaining power into the hands of the insurer. Worse, this may cut against the purpose of UMP: to protect innocent parties.

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