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BC Court of Appeal Gives Broad Interpretation to ICBC's Fire Loss Coverage

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Reasons for judgement were released this week by the BC Court of Appeal discussing the extent of ICBC’s comprehensive coverage for vehicle fire damage under the former section 132 of the Insurance (Vehicle) Regulation.
In today’s case (Swailes v. ICBC) the Plaintiff leased a Corvette.   The Plaintiff purchased insurance with ICBC which included “comprehensive coverage” for vehicle damage.  This coverage included loss caused by fire.
Shortly after leasing the vehicle the Plaintiff “spun the car’s tires excessively, causing the left rear axle ‘U’ joint to break and immobilize the vehicle. ”  This in turn caused the vehicle to catch fire “by the resulting build-up of heat in the rear tire wells“.  The damage was extensive and the vehicle was written off.
ICBC refused to provide coverage to the Plaintiff relying on a clause excluding “loss or damage..caused by mechanical fracture, failure or breakdown of any part of a motor vehicle“.  The Plaintiff sued although the case was dismissed with the Trial Judge holding that the loss was excluded as it was caused by mechanical breakdown.
The Plaintiff appealed and succeeded.  The BC Court of Appeal overturned the trial judgement and in doing so provided the following useful reasons giving a broad interpretation to ICBC comprehensive fire loss coverage:

[24]         While Jeffrey was ultimately decided on other grounds, I agree with Mr. Justice Oliver’s view of the exception for loss or damage caused by fire created by s. 132(1). While the provision is clumsily worded, its meaning is clear. If the loss or damage was caused by mechanical fracture, failure or breakdown the exclusion will ordinarily apply, unless that loss or damage was caused by fire. Here, while the trial judge found the broken axle caused the fire, the exception permits fire to supercede that finding as to cause and allows Mr. Swailes to recover indemnity for loss of the vehicle due to fire.

[25]         The respondent maintains that such an interpretation renders the exclusion meaningless. That is only the case, however, in situations where the loss being claimed is caused by fire, theft, or malicious mischief. This interpretation of the exception is consistent with the comprehensive coverage defined in s. 1 of the Regulation, which includes loss or damage arising from those causes. I am satisfied the intent of the exception in s. 132(1) is to preserve that coverage in cases where the exclusion would otherwise apply.

[26]         I am satisfied that the “loss or damage” at issue here is the loss of the vehicle, and the trial judge erred in defining that term too narrowly and restricting it to the types of damage in s. 132(1)(a), (b), and (c).

[27]         I would accordingly allow the appeal, set aside the order dismissing Mr. Swailes’ claim, and remit the matter to the Supreme Court for damages to be assessed.

Fire Loss, ICBC Comprehensive Coverage, section 132 Insurance (Vehicle) Regulation, Swailes v. ICBC

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