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September 10, 2012

Is Your Teen the Principal Operator of a Family Car?

Is it time for your teen to take their own car to school and save you some time?

Insurance for a teenager is more expensive. A new driver will pay more for insurance since they don’t have the years of safe driving history. A parent might decide to insure the car under their name to save on premiums. But if the teen is the principal driver, what happens then if your child gets in an accident? 

In Lau v. Insurance Corporation of British Columbia, the plaintiff, Yu Jung Lau, bought a car for his son Victa. Victa is the principal operator. But the insurance named Yu Jung as the principal operator.

Victa was in an accident. He collided with another vehicle causing bodily injuries to the passengers in the other car. ICBC denied insurance coverage to Yu Jung on the basis that he misrepresented who would be the principal operator when he applied for the insurance. The Judge said Yu Jung Lau knew that when he applied for insurance he was not the principal operator and he knowingly misrepresented that fact. The insurance coverage was forfeited with the result that he had no insurance to cover the property damage or to compensate the injured third parties.

While it might have seemed wise to save a small amount of money on insurance premiums, misrepresenting the identity of the principal operator to ICBC is never a good idea and can, as in the case of Yu Jung Lau, lead to significant financial consequences.

If you tell ICBC you are the principal operator when the truth is the principal operator is someone else like your teenager or your spouse, then you could be in breach of the insurance policy. You could be personally responsible to pay damages if the real principal operator causes an accident. Insurance is a contract of good faith. Protect yourself and tell the truth when applying for insurance.

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