Climate Change, BC Floods, and Your ICBC Insurance Rates

The consequences of the flooding and devastation in BC right now will lead to massive payouts from ICBC. In fact, climate change will affect your ICBC insurance rates and the cost of owning a vehicle in ways that we have not really considered.

This morning, it was reported that roughly 5000 cars were stopped in some fashion on Highway 1 leading out of the Lower Mainland. There were cars trapped in mudslides, cars that have floated away in communities throughout Southern British Columbia, and cars partly or mostly submerged in places like Merritt, Abbotsford, and the Cowichan Valley.

Each of these cars will require repairs – at the very least – to the significant water damage. While it is easy to imagine those vehicles that are no longer drivable and the replacement cost associated with them, there are also vehicles with lesser forms of damage: water damage to seats and interior fabrics, vehicles that have damage to the paint, dents from debris striking against vehicles, and the cleaning costs associated with removing mud, debris, and water from inside vehicles.

ICBC is, in many circumstances, going to be obligated to pay for these costs.

But the ICBC costs associated with the BC floods are likely going to impact people negatively overall.

First, although we have seen ICBC rebates related to the pandemic and savings under the no-fault insurance scheme, any savings associated with that are likely offset by the cost of replacing and repairing thousands of cars.

Expect that this will cause insurance rates to increase. So much for that promised decrease in insurance rates.

The reason?

Some may say that this is the cost of climate change. That means that ICBC is going to have to factor that into their rates. If extreme weather events such as what we have seen this summer and now this fall are likely to continue every year and likely only to get worse, ICBC insurance rates will inevitably have to reflect that.

And then we have the ongoing issue of supply. With supply chain shortages globally, global chip shortages, and pre-existing shortages of used cars for sale, the replacement cost of a vehicle is significantly increased.

ICBC will not pay you what it will cost you to get a new car or a good used car. Instead, ICBC’s payout will be the blue book value of your vehicle, typically averaged from listings found online or through other resources. As a result, if your vehicle was written off due to the flood, mudslides, or any other climate-related event, you may be out-of-pocket trying to replace it.

And with major roadways throughout BC closed for the foreseeable future, transporting new and used cars into the Lower Mainland and Southern interior of BC has become that much more difficult – exiting problems notwithstanding.

Suddenly the cost of a replacement vehicle has increased again to reflect the added difficulty of bringing the car to you, and the value of your damaged car does not offset the costs of replacing it.

One can only hope that the federal government, or perhaps the province, will provide a subsidy to reflect this for people whose vehicles have been written off due to the flooding, mudslides, and impacts of climate change. But I am not holding my breath.

In the meantime, it’s probably time to review your insurance policy and make sure you have collision, comprehensive… and climate change coverage.

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