Blog Direct Compensation Property Damage Insurance In Ontario

Dec 8, 2023

What You Need To Know About DCPD Coverage

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How Ontario's Direct Compensation Property Damage (DCPD) coverage works is changing. On January 1, 2024, this coverage will become optional.

Not familiar with Direct Compensation Property Damage or DCPD? Want to learn more about direct compensation coverage and how it impacts car insurance claims?

In the insurance world, policyholders must understand various coverage types to make informed decisions and navigate the aftermath of unforeseen events. To help you better understand what is included, we have compiled what you need to know about DCPD and how it can affect your Ontario auto insurance coverage.

What is Direct Compensation Property Damage Insurance?
How is Direct Compensation Property Damage changing in 2024?
How does DCPD Work?
Direct Compensation Property Damage insurance mandatory?
What are the DCPD rules in Ontario?
Are all non at-fault accidents covered under DCPD?
Is there a Direct Compensation Property Damage deductible?
Direct Compensation Property Damage Insurance FAQs

What is Direct Compensation Property Damage?

Direct Compensation Property Damage (DCPD) is a form of car insurance. It includes all basic auto policies, third party liability, and accident benefits.

Direct compensation also refers to the way your claims are paid out. In Ontario, for all non-at-fault accidents, you will be compensated directly by your insurer.

DCPD insurance compensates when you or your car is damaged in an accident you didn't cause. It is called direct compensation because you deal directly with your insurer. It means you deal with your insurer for all no-fault insurance claims. You won’t have to wait for the other driver’s insurer to decide to process your claim. You also won’t have to sue the at-fault driver to recover damages, and will be compensated directly.

How is Direct Compensation Property Damage changing in 2024?

Currently, all automobile policies in Ontario include DCPD. One of the major changes to Ontario's auto insurance industry is the optional status of a key element of no-fault insurance. As of January 1, 2024, you can opt out of DCPD by adding the OPCF 49 endorsement.

DCPD will still be included in your policy and available when you compare car insurance quotes in Ontario. However, you can remove this coverage to save about 10% on your policy cost. It’s important to speak with your broker about this decision because while it may save you money in the short term, opting out of DCPD insurance could result in significant long-term costs.

As of August 2023, the average vehicle costs Canadians $66,000, which is up from 21% in the last year and 47% over the previous four years. If you are in an accident, you would need to cover those repairs or a vehicle replacement out of pocket if you don’t have DCPD.

How does DCPD Work?

If someone hits your car, your insurance company can pay to fix the damage or replace your vehicle. They will provide a payment based on your car's current value, which you can use to purchase another car. However, coverage for damage to your vehicle if you are at fault in a collision is not automatically included in policies. You need to add this option to your policy.

If you sign OPCF 49 to save money on insurance, you will lose the no-fault insurance coverage for your car. This means you cannot sue the other vehicle's driver or owner. To receive a premium discount, the OPCF 49 form requires the policyholder to consent to not receiving compensation for any physical damage to their car in case of a collision.

However, your insurance policy will still include accident benefits coverage, which can provide compensation if you are injured. Additionally, you will have at least $200,000 in third-party liability coverage. This coverage will protect you from lawsuits if you cause an accident and someone else is injured, or their property is damaged.

Always speak with your broker to learn more about your policy limits and exceptions.

Want to lower your premium without losing coverage?

Direct Compensation Property Damage insurance offers valuable coverage for your vehicle. Speak with our brokers to learn more about ways to save on insurance.

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Is Direct Compensation Property Damage insurance mandatory?

DCPD is mandatory until January 1, 2024. At this time, it will become optional in Ontario.

Ontario's insurance regulator has approved OPCF 49, which allows policyholders to decline Direct Compensation Property Damage (DCPD) coverage.

The Ontario government plans to offer consumers more options as part of its 2022 budget. One proposed measure is to provide greater access to usage-based insurance (UBI) programs. Additionally, the government will crack down on insurance fraud and re-evaluate the use of postal codes to determine premiums.

There is a wide range of OPCFs for Ontario drivers to choose from to customize their car insurance and lower costs or have added protection.

What are the DCPD rules in Ontario?

There are four criteria that must be met to use Direct Compensation Property Damage insurance :

  1. Not at-fault: You must not be at-fault for the accident. Fault determination rules under the Insurance Act are used to assess who caused the collision.
  2. Vehicles involved: One or more vehicles must be involved in the accident.
  3. Insured: All vehicles that opt in for DCPD must be identified and insured.
  4. Location: The accident must happen within Ontario for DCPD to come into effect.

When all of these situations apply, it will enact direct compensation coverage.

Are all non at-fault accidents covered under DCPD?

No. There are certain situations where non-at-fault accidents, such as hit and runs, are not claimed under DCPD. This will be filed through your collision insurance .

Similarly, if you are involved in an accident with an uninsured driver and are not at-fault, the claim will be filed under the uninsured automobile section of your policy.

Is there a Direct Compensation Property Damage deductible?

No, most policyholders do not have a deductible for DCPD insurance and claims. This is the case because you are not at-fault. However, if part of your claim falls under collision, you must pay the deductible.

For example, if you are found to be 20% at fault, 20% of your claim would fall under collision and 80% under DCPD. This means you must also pay 20% of your collision deductible. If your deductible is $1000, you must pay $200.

Direct Compensation Property Damage Insurance FAQs

No. There is not an option to increase or add additional DCPD coverage. If you want more protection, we recommend adding collision insurance. Speak with our brokers to select the right level of coverage.

Direct compensation agreements are put in place to make the claims process simpler and more efficient. In the past, if you were in an accident that wasn't your fault, your insurance company would have to chase the other driver's insurance company to get compensation for damages. This often led to delays in claim payouts, making the process longer and more frustrating.

No. Ontario is one of a number of provinces that offer Direct Compensation Property Damage insurance through car insurance quotes.

DCPD is also available in the following provinces:

  • Alberta
  • Nova Scotia
  • Prince Edward Island
  • New Brunswick
  • Quebec

Removing DCPD can pose a lot of risk for a small insurance discount. You should consider that vehicle repairs take longer than before due to part shortages and supply chain disruptions. DCPD helps the process move faster because the policyholder only needs to deal with their provider rather than coordinating with the other people involved.

Secondly, the cost of vehicles and repairs has increased - opting out of DCPD puts you at greater risk of paying for vehicle repairs and replacements out of pocket.

Leasing or financing a vehicle without DCPD can be risky. If you have an accident that is not your fault, you may be held liable for the total cost of the vehicle. This is because the dealership or financing company is usually the vehicle's true owner and typically requires certain types of coverage. Review the lease or financing agreement before signing and speaking with an insurance professional.

Speak to our brokers about DCPD

DCPD is a valuable part of insurance that simplifies claims for accidents. Individuals can make informed decisions for their policy needs by understanding its benefits and limitations. It aims to provide efficiency, speed, and peace of mind in times of need, and is likely worth keeping.