Understanding Car Insurance Coverage: Direct Compensation — Property Damage

Auto insurance is a critical safety net for drivers in Ontario, providing financial protection in the event of collisions, or other unexpected incidents on the road.

Among the coverages available, Direct Compensation Property Damage (DCPD) insurance holds a unique position. DCPD is compulsory, but in January 2024 customers will be able to opt out of the coverage.

Now, drivers should be made aware that DCPD is key in providing them with immediate compensation for repairs after a no-fault collision with a third party.

Other provinces that have made DCPD a standard insurance practice include Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Alberta.

As opting out of DCPD will be new to Ontarians, we’ll clarify the nuances of this insurance coverage; what it entails, how it differs from standard liability coverage, and its significance in safeguarding your financial interests in the aftermath of a collision.

What is DCPD Insurance?

DCPD ensures your insurance company covers damages to your vehicle if you’re involved in a no-fault collision with a third party.

What sets it apart from standard liability coverage is that it allows you to claim compensation directly from your insurance provider for property damage, but only when a third-party driver is at fault.

This feature is particularly valuable because it streamlines the claims process and ensures that you don't have to rely on the other party's insurance. Unlike traditional liability coverage, where you typically claim compensation from the at-fault party's insurance, DCPD enables you to seek compensation from your insurer. 

What does DCPD coverage include?

DCPD insurance encompasses two primary coverage components:

• Coverage for Your Vehicle and Property Damage: DCPD provides financial protection for the repair or replacement of your vehicle and any property inside it that gets damaged in a collision.
• Compensation of Loss of Vehicle: While your car is being repaired, DCPD covers the cost of a rental vehicle or public transit expenses.

Customers can purchase DCPD with or without a deductible with Onlia. The options are $0, $300 and $500. If an insured is 0% at fault, they’ll be compensated based on that deductible. If an insured is 100% at fault, there is no coverage under DCPD. However, the insured will be compensated under collision coverage — if purchased.

For example, if an insured is 25% at fault, then DCPD will pay 75% of the claim, apply 75% of the DCPD deductible, plus collision, if present will pay 25% of the value of the claim, minus 25% of the collision deductible.  

Changes to DCPD insurance in Ontario

DCPD insurance eligibility varies by region and insurance provider. 

Come January 1, 2024, drivers can opt out of DCPD by signing the Ontario Policy Change Form 49, or OPCF 49 for short. The option for customers was enacted by the provincial government in an effort to help Ontarians save money.

If you’re involved in a no-fault collision and have opted out of DCPD, you will not be reimbursed for:

• Damage to your vehicle
• Value of the vehicle
• Loss of vehicle use
• Vehicle replacement
• Personal contents in the vehicle

Benefits of DCPD insurance

DCPD insurance offers several advantages:

• Streamlined Claims Process: With DCPD coverage, you can avoid lengthy negotiations with the at-fault party's insurer. Your insurance provider handles your claim, expediting the process.
• Direct Compensation: DCPD insurance will provide you with compensation when you are involved in a collision with a third party that you didn’t cause. 

Limitations and exclusions

While DCPD insurance offers valuable protection, it also has limitations and exclusions:

• Fault Determination: In some cases, DCPD may require a determination of fault. It’s an additional step that is dependent on the information shared in a claim.
• Jurisdictional Variations: The availability and specifics of DCPD coverage can vary by region, so it's essential to check with your insurer to understand your specific coverage details. Alberta and Ontario are the only two provinces that allow you to increase the deductible for DCPD.
• Outside Insurers: If a third-party is not insured by a DCPD participating insurer, say a small mutual company from the U.S., then DCPD will not be enacted and the driver will have to seek other means of getting compensation.

DCPD vs. other car insurance coverages

DCPD insurance has its unique place in the world of auto insurance, but it's essential to understand how it compares to other coverage options:

• Collision Insurance: While collision covers an incident with another vehicle, trailer, hit-and-run (when reported to police) and collisions with stationary objects, DCPD only applies to no-fault collisions. Now, if you are found partially at fault for a collision, DCPD will cover the amount the third-party would be liable for, while collision tags in to cover the rest.
• Comprehensive Insurance: DCPD and comprehensive insurance cover different types of incidents. Comprehensive insurance protects against non-collision events like theft, vandalism, and natural disasters.
• Liability Insurance: Liability insurance covers damages and injuries you cause to others. DCPD, in contrast, only covers your property damage in specific situations.

Filing a DCPD insurance claim

Filing a DCPD insurance claim involves several steps:

• Report the Incident: Promptly report the collision or incident to your insurance provider and to the police.
• Gather Documentation: Collect all necessary documents, including the police report, witness statements, photos of the scene, and any relevant medical records.
• Complete the Claim Form: Fill out the claim form provided by your insurer, providing accurate and detailed information about the incident.
• Submit the Claim: Submit your completed claim form and supporting documents to your insurer for review.
• Claims Assessment: Your insurer will assess the claim, including fault determination, and provide you with a claim settlement offer.

The importance of DCPD coverage

DCPD offers a streamlined claims process and immediate compensation when the driver is not at fault when in a collision with another third party. Those who opt out can be left responsible for damages and repairs — including towing and storage. 

DCPD is an important coverage to have if you don’t want to be faced with paying for these expenses out of pocket. A small monthly investment in Direct Compensation — Property Damage coverage can offer peace of mind and financial security against the unpredictable.