UMP, ICBC AND MORE

Continuing on from where I left off in the last article “Canadian Client Injured in America“

All About UMP
Most importantly, you need to be mindful of the way that underinsurance (UMP) works for all BC residents.  You cannot settle a US action for policy limits without first obtaining ICBC’s consent; otherwise, you risk forfeiting your client’s entire UMP claim.

Every ICBC-licensed driver, member of the household of the licensed driver and occupants in his or her vehicle maintains CDN $1M UMP coverage, providing a social safety net for significant claims.  In reality, the various deductions for Canada Pension Plan, (un)-employment insurance and both public and private disability plans reduce UMP awards so drastically that they provide very little safety net for a catastrophically injured plaintiff.  Still, it represents a potential claim worth at least several hundred thousand dollars, and you certainly don’t want to face such a legal malpractice claim for preventing your client from being able to pursue it.

The ICBC Regulations that control UMP dictate that the law of the place where the tort occurred will determine issues of liability, while “quantum” or “computation of damages” is determined under British Columbia law.  Moreover, a plaintiff has no ability to negotiate settlement of an UMP claim until he or she has “perfected” the tort claim, meaning that the plaintiff will have obtained either a judgment in excess of policy limits or will be able to prove that the defendant does not have sufficient assets beyond policy limits to satisfy a potential judgment.  In order to gain an ICBC adjuster’s consent to settle a tort claim for policy limits, you will most likely need to provide the following documents to the adjuster:  (1) copy of your demand letter; (2) a copy of opposing counsel’s response letter or the adjuster’s offer for policy limits; (3) the defendant’s insurance policy declaration page showing limits; and (4) a declaration or affidavit stating that the defendant has no non-bankruptable assets to satisfy a judgment above policy limits.

Washington Vs. British Columbia
Because the computation of damages is determined by British Columbia law, it is important for a Washington practitioner to know what factors of a plaintiff’s case will garner higher damages in Washington than in British Columbia.  You might refer to the second article I referenced above, which is included in these materials.  There may be ways to force ICBC to satisfy a Washington judgment, particularly where ICBC may  force a plaintiff to litigate the tort claim even after satisfying them that the defendant has no further assets.  These tactics are usually at the hands of insurance adjusters who are oblivious of bad faith laws.  Whether Washington’s bad faith laws can be applied to foreign insurers like ICBC is a question to which we’re about to get an answer.

Finally, it is important to know that the typical Canadian plaintiff may be accustomed to the recovery of costs in litigation.  British Columbia follows a “loser pays costs” approach to litigation such that all medical records and reports, expenses for photocopying, filing fees and any other out of pocket expenses, as well as a portion of  attorney’s fees are added to the judgment or settlement as the responsibility of the losing party.  You will want to make sure that your Canadian client is fully aware of the inability to recover costs in Washington.  You will also want to keep in mind, in any case where an UMP claim is later likely to be made, that you may wish to hold off on spending money to document the claim until the UMP claim has been perfected (i.e., that you have obtained policy limits in the tort action).  That way, any costs that are incurred to document the claim will be incurred in the context of the UMP claim, for which such costs are recoverable.