Post Crash Engine Failure Found To Be Protected Under ICBC's Collision Coverage
(Update March 17, 2015 – the below decision was largely upheld by the BC Court of Appeal in reasons for judgement released today)
Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, addressing the scope of ICBC’s collision coverage when a vehicle has mechanical issues following a crash.
In today’s case (Dhadwal v. ICBC) the Plaintiff leased a high end Mercedes valued at $120,000. He purchased optional collision coverage with ICBC. The vehicle was driven into a ditch and suffered modest damage which appeared to be cosmetic in nature. The vehicle appeared intact and was driven home. The next day, while driving to a repair shop, the engine seized resulting in over $82,000 of needed repair costs. ICBC refused to cover these arguing it was a mechanical issue unrelated to the collision, or in the alternative, it was unreasonable for the Plaintiff to drive following the crash. In rejecting both of these arguments and requiring ICBC to pay damages Madam Justice Warren provided the following comments:
[63] In my view, it is clear from the Hall Report that neither of the two sources of causation, the collision and the subsequent driving, would alone have resulted in the engine failure. It was the combination that caused the damage. Neither was dominant, since the engine damage would not have occurred but for both causes.
[64] Where there are concurrent causes of a loss for which an insurance claim is advanced, there is no presumption that the coverage is ousted if one of the concurrent causes is an excluded peril. An insurer may oust coverage where one of the concurrent causes is covered and another excluded, but only by express language in the policy to that effect. Whether an exclusion clause applies in a particular case of concurrent causes is a matter of interpretation: Derksen v. 539938 Ontario Ltd., 2001 SCC 72, at paras. 48-49; Chandra v. Canadian Northern Shield Insurance Co., 2006 BCSC 715, at paras. 27, 50.
[65] For the foregoing reasons, I find that all the damage to the Mercedes, including the engine damage, is damage “caused by … collision of a vehicle with another object … including a … culvert” and, as such, falls within the definition of “collision coverage” in the Optional Policy. Whether the coverage for the engine damage is nevertheless ousted depends upon the construction and application of the exclusion in s. 5.9(a) of the Optional Policy and Prescribed Conditions 5(3) and (4)…
[104] It is my view that the mechanical breakdown in this case, i.e. the engine damage, was coincidental with the damage that occurred on June 7, 2012, because the two losses corresponded in substance, nature, character, and time. Specifically, the two losses arose from the same incident (i.e. the collision) and were part of the same chain of causation. The collision resulted in immediate body damage and damage to internal components of the Mercedes (specifically, the oil cooler, the oil cooler hoses, the radiator hoses, the radiator outlet tank, and the connection), which in turn caused coolant and engine oil to be lost, and, in combination with the driving after the accident, resulted in the seizure of the engine. In these circumstances I find that the two losses were closely similar, or in other words corresponded in, substance, nature, character, and time.
[105] I conclude that the exception to the exclusion in s. 5.9(a) applies to the engine damage incurred in this case, as the engine damage was “coincidental with” the damage that occurred immediately upon impact, and the latter was damage for which indemnity was provided under the collision coverage of the Optional Policy…
[126] Driving a vehicle that has sustained apparently minor damage in a collision to the owner’s home, and then to a repair shop, rather than having it towed, is a common and everyday occurrence. The evidence satisfies me that the observable body damage to the Mercedes was minimal and consistent with a low-impact collision, and that there were no signs of leaking fluids prior to the engine shutting down. I am also satisfied that it is more likely than not that no warning lights were illuminated to indicate low fluids or that the engine should be checked.
[127] There is no evidence upon which I could conclude that Mr. Dhadwal or his family members did something a reasonably prudent person would not have done, or failed to do something a reasonably prudent person would have done. In particular, there is no evidence from which I could conclude that Mr. Dhadwal or his family members should have known, at any time prior to the moment before the engine shut down, that the fluids had been lost from the collision damaged components…