Direct Compensation Property Damage Insurance In Ontario

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.

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.

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.

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.

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.

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.

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.