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Does Bankruptcy Affect My Car Insurance in BC?

Car insurance is a fundamental aspect of responsible vehicle ownership, and in the province of British Columbia (BC), it takes on a unique form. Unlike other provinces, car insurance in BC is run by a crown corporation, the Insurance Corporation of British Columbia (ICBC). In this article, we delve into the intricacies of car insurance in British Columbia, unique features, and post-Bankruptcy insurance premiums.

Why Car Insurance Matters 

Car insurance is not just a legal requirement but a crucial element in protecting both drivers and their vehicles. Here are key reasons highlighting the importance of having car insurance in BC:

  • Legal Requirement: Car insurance is mandatory in British Columbia. Driving without insurance can result in fines, license suspension, or other legal consequences.
  • Financial Protection: Car insurance provides financial protection in the event of an accident. It helps cover the costs of repairing or replacing your vehicle, as well as any property damage you may cause to others. Without insurance, you would be personally responsible for these expenses. Getting in an accident while not insured could lead to Bankruptcy or financial ruin.
  • Liability Coverage: Fundamental to car insurance, liability coverage shields you from financial responsibility if you are deemed at fault in an accident. It covers the costs of bodily injury and property damage to others involved.
  • Medical Expenses: Car insurance can cover medical expenses resulting from accident injuries, encompassing your medical bills and those of your passengers. Without insurance, substantial out-of-pocket expenses for medical treatment may arise.
  • Protection Against Uninsured Motorists: Uninsured motorist coverage safeguards you in accidents involving uninsured or underinsured drivers, covering your medical expenses and damages.
  • Collision Coverage: An optional but valuable component, collision coverage covers repair or replacement costs for your vehicle in collision-related damages, regardless of fault.
  • Comprehensive Coverage: Comprehensive coverage protects against non-collision events such as theft, vandalism, or natural disasters, offering a wide-ranging safeguard for your vehicle.

What Does ICBC Do?

The Insurance Corporation of British Columbia (ICBC) is the sole provider of car insurance in BC. Here’s an overview of ICBC car insurance, its unique features, and how it operates:

  • Government-Run Insurance Provider: ICBC is a government-run insurance provider, established by the provincial government of British Columbia. Unlike other provinces in Canada where private insurers dominate the market, BC’s car insurance operates under a public insurance model, making ICBC the sole provider of basic Autoplan coverage. That means you can’t shop around for companies that offer cheaper car insurance.
  • No-Fault Insurance Model: One distinctive feature of ICBC’s car insurance system is its adherence to a no-fault insurance model. In a no-fault system, regardless of who is deemed responsible for an accident, each party deals with their own insurance provider to cover the associated costs. This contrasts with fault-based systems, where the at-fault party’s insurance typically covers damages.
  • Basic Autoplan Coverage: Autoplan insurance in BC is the foundational insurance package that includes mandatory coverage required by law. Basic Autoplan covers third-party liability, accident benefits, underinsured motorist protection, and hit-and-run coverage. Drivers in BC are legally required to have this basic coverage. 
  • Optional Coverages: In addition to Basic Autoplan, ICBC offers optional coverages that drivers can purchase to enhance their protection. These include additional liability coverage, collision coverage, comprehensive coverage, and coverage for specific perils like fire or theft. These options allow drivers to tailor their insurance to their individual needs.
  • Premium Determination Factors: ICBC uses various factors to determine insurance premiums. While private insurers in other provinces often consider credit scores, BC’s public insurance model primarily relies on factors like driving history, location, vehicle type, usage, and coverage options. This approach aims to provide a more equitable and inclusive system for all drivers.
  • Claims Process: In the event of an accident, the no-fault system simplifies the claims process. Each party involved contacts their own insurance provider, and ICBC handles the claims independently. This streamlined process is designed to expedite claims resolution and ensure that drivers receive prompt assistance, regardless of fault.

Does Someone in BC With Bad Credit or Bankruptcy Have to Pay More or Get Special Insurance? 

In British Columbia, credit scores do not directly impact car insurance costs or necessitate special insurance. ICBC sets the rate and you don’t have an option to find a better price.

BC’s public insurance model under the Insurance Corporation of British Columbia (ICBC) focuses on factors like driving history, location, vehicle type, usage, and coverage options to determine rates, without considering credit scores. Drivers will remain covered by the ICBC insurance even after going through Bankruptcy or if they have a bad credit score.

While credit scores may not directly influence BC auto insurance premiums, maintaining a positive credit history can benefit other financial aspects. A good credit rating may qualify you for favorable loan and credit card rates and could contribute to eligibility for discounts from other service providers.

Bankruptcy exemptions in British Columbia

In British Columbia, Bankruptcy is governed by federal laws under the Bankruptcy and Insolvency Act (BIA), but the exemptions that protect certain assets from being seized and sold to pay off debts are determined by provincial laws. These exemptions are designed to ensure that individuals undergoing Bankruptcy proceedings can retain some essential assets necessary for a fresh start after the discharge of their debts. 

There is usually an exemption for a motor vehicle, up to a specified value. This exemption recognizes the importance of having reliable transportation for work and personal needs.

Can I Defer my ICBC Premium Payments?

ICBC provides flexibility for premium payments, offering potential deferral options in specific circumstances. If financial challenges prevent timely ICBC payments, contacting them promptly is recommended. ICBC may present various solutions:

  • Payment Deferrals: In cases of financial hardship, ICBC might allow you to defer premium payments, establishing temporary arrangements without immediate impacts on coverage.
  • Payment Plans: Flexible payment plans may be available, enabling the spreading of premium payments over a designated period for easier financial management.
  • Financial Hardship Programs: ICBC may offer programs aiding policyholders facing financial difficulties, incorporating relief measures or alternative payment arrangements.

ICBC will add a credit mark to the debtor’s account which has the effect of not permitting credit financing with ICBC for 6 years from date of insolvency discharge. In the alternative however, debtors can purchase insurance for 3 months or more by paying the premium amount and fees outright.

Why Choose Allan Marshall & Associates?

At Allan Marshall & Associates, we empathize with the financial challenges in your community. Our team, familiar with local insurance costs and provincial laws, specialize in addressing your individual situation. Our Insolvency Trustees listen, offer solutions, and guide you through debt resolution, keeping you on a path to financial stability. Book a free consultation today.

Cherry Dumalagan Licensed Insolvency Trustee

Cherry Dumalagan

Cherry is a Certified Public Accountant from the Philippines who migrated to Canada in 2004.

She had to recertify as a CPA in Canada. She worked in various accounting and insolvency roles and is now a Licensed Insolvency Trustee. She is also a designated Master Tax Professional.

Cherry is fluent in English, Filipino, and Visayan dialect. In her free time, she enjoys singing acapella with the Westcoast Harmony Chorus.

She aims to provide comfort and hope to people by listening, caring, and offering help.