Insurer accused of bad faith pays $100,000 more for repairs than what the car is worth

B.C.’s Supreme Court has allowed a bad faith claim to proceed against the Insurance Corporation of B.C. in the case of a Ferrari repair that cost the government insurer almost $800,000 — about $100,000 more than what the car was worth.

Navraj Heran drove his 1990 Ferrari F40 into a utility pole in 2011. The total cost of repairs is estimated to be in excess of $982,000.

Following an investigation, the Insurance Corporation of B.C. (ICBC) eventually admitted coverage and accepted it was obliged to cover the cost of repairs. But it said it would only pay up to a maximum of the actual cash value of the vehicle, which an arbitrator determined in 2014 to be $696,061.17.

ICBC told the court it has already paid $789,374.66 towards repairs and refuses to pay more.

Heran, a known collector of Ferrari automobiles, brought a claim against ICBC that included a claim of bad faith. Among other things, he said the ICBC’s delays in repairing the vehicle cost him the financial ability to purchase additional collector cars on advantageous terms. He also cited the diversion of his billable time and resources having to monitor the ICBC’s repair process.

ICBC asked the court to strike the bad faith portion of Heran’s claim, or at least sever it and postpone it until after the rest of the claim had been decided. Among other things, the insurer said the insurance contract was to indemnify for repairs made, and that the claimant should have arranged for the repairs himself.

ICBC further noted that it made a fund of $503,028 available to the plaintiff in April 2014, after an arbitrator determined the actual cash value of the car. Since the plaintiff did not draw those funds to make repairs, ICBC added, any delay after that date is of the plaintiff’s own making.

Heran counters that ICBC took control of the car immediately after the accident and never relinquished it, which prevented him from arranging and paying for the repairs himself. He also pleaded in court that ICBC specifically agreed to arrange and pay for the repairs itself, but then failed to do so in a timely way.

The court did not decide on the merits of Heran’s case, but it did allow the bad faith part of the claim to proceed. Furthermore, it did not grant ICBC’s motion to sever the bad faith portion of the claim and stay proceedings on it until the rest of the issues in Heran’s claim had been decided.

“ICBC argues that it may have to waive privilege over the legal advice it received in order to defend itself against the bad faith allegation, and it should not have to do so if that result can be avoided by trying the other issues first,” the court noted of ICBC’s reasons for trying to sever the bad faith claim.

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.