Should You Remove DCPD Coverage from Your Auto Insurance?

Earlier this year, drivers in Ontario were given a new choice regarding their auto insurance coverage: whether or not to keep Direct Compensation Property Damage (DCPD). While previously mandatory in all car insurance policies, the introduction of an endorsement known as OPCF 49 now allows motorists to opt out of this coverage, creating a decision that requires careful consideration. 

In this blog, we’ll explore how DCPD protects drivers, explain Ontario’s no-fault insurance system, and provide some reasons why you may or may not want to remove DCPD from your car insurance policy. Keep reading to learn more!

 

Understanding Direct Compensation Property Damage (DCPD)

DCPD insurance is a specific component of auto insurance in Ontario. It covers damage to your vehicle and its contents if you are not at fault in an accident with another insured vehicle. Here are the key aspects to understand:

Coverage Scope: DCPD covers the repair or replacement of your vehicle and any loss of use or damage to its contents when another driver is at fault. This ensures that you receive compensation directly from your own insurer without having to go through a lengthy process with the at-fault driver's insurance. Any costs incurred to rent a vehicle or use public transit are also covered. 

If you are found partially at fault in an accident in Ontario, Direct Compensation Property Damage (DCPD) coverage will compensate you based on your degree of fault. For example, if you are 25% at fault for $5,000 in damages, your insurance will cover $3,750 (75%), and you will be responsible for the remaining $1,250 (25%).

Exclusions: It does not cover accidents where you are at fault, incidents with uninsured drivers, hit-and-runs, or collisions that occur outside of Ontario. For such scenarios, collision or comprehensive coverage would be necessary. Additionally, DCPD does not include coverage for bodily injuries.

Claims Process: The claims process under DCPD is typically fast and efficient, as it involves dealing directly with your insurer rather than pursuing claims against another party’s insurance.

 

Ontario's No-Fault Insurance System Explained

You may have heard that Ontario operates under a no-fault insurance system. Despite what the name suggests, this does not mean that there are instances where no one is found at fault in an accident. Instead, it refers to how claims are handled following the incident. Under this framework, all parties involved in a collision must file a claim through their insurance provider, regardless of who caused the accident.

This system aims to expedite the claims process and reduce legal battles over injuries and property damage sustained from the accident. DCPD is a critical component of Ontario’s auto insurance landscape and ensures that drivers are promptly compensated for vehicle repairs and related costs in accidents they did not cause.

In Ontario, fault determination is guided by standardized rules detailed in the Insurance Act and its accompanying Fault Determination Rules. These rules cover a wide range of accident scenarios, from rear-end collisions to intersection accidents and provide specific guidelines for assigning fault. Insurers collect evidence such as police reports, witness statements, photographs, and driver statements to determine each driver's percentage of fault. 

Fault can be fully or partially assigned to one or more drivers on a scale ranging from 0 to 100%. The amount of fault assigned to each motorist can affect their insurance records and potentially increase future premiums. Common examples include a driver who rear-ends another vehicle, typically being found at fault and drivers who run a red light and cause an intersection collision. 

Suppose a driver disagrees with the fault determination. In that case, they can dispute it through their insurer’s internal process and, if necessary, escalate it to the General Insurance OmbudService (GIO) or seek legal advice. This system ensures a fair and consistent approach to handling claims and determining fault.

 

OPCF 49 and Its Impact

An OPCF, Ontario Policy Change Form, is a document used to modify standard auto insurance policies. These forms allow policyholders to add, remove, or alter specific policy coverages and conditions. Each OPCF has a unique number and name that identifies the specific type of coverage modification it represents.

OPCF 49 refers to the Agreement Not to Recover for Loss or Damage from an Automobile Collision. It is used to remove Direct Compensation Property Damage (DCPD) coverage from an auto insurance policy. Other OPCFs might add rental vehicle coverage, remove new vehicle depreciation, or provide other specified protections. These forms give policyholders flexibility to customize their insurance policies to better meet their individual needs and circumstances.

Here are some key considerations to keep in mind regarding the impact of adding OPCF 49 to your policy:

Reasons to Consider Removing Direct Compensation Property Damage

Premium Adjustment: Removing DCPD coverage could lower your car insurance policy premium by as much as 10%; however, it's essential to weigh these savings against the potential out-of-pocket costs for repairs or replacements in the event of an accident

Older Vehicles: If you drive an older vehicle with a lower market value, the cost of maintaining DCPD insurance may not be justified for a car that isn’t worth much, allowing you to save money on your insurance without taking on undue financial risk. 

Financial Preparedness: Opting out of DCPD can be a sound financial decision for individuals with sufficient financial resources to cover the costs of vehicle repairs or replacement costs. If you have a large sum of money set aside for emergencies and can comfortably afford to pay for repairs out-of-pocket, the premium savings might outweigh the benefit of having DCPD coverage.

Reasons to Keep Direct Compensation Property Damage

Coverage Reduction: By opting out of Direct Compensation Property Damage via OPCF 49, your insurance provider will no longer provide protection in the event of an accident where you are not at fault. You would be on the hook to cover repairing, replacing, towing, and storing your vehicle with your own funds.

Vehicle Value: If you own a newer or more valuable vehicle, maintaining DCPD is crucial to protect your investment. The cost of repairing or replacing a high-value car can be substantial, and DCPD coverage ensures that you are not burdened with these expenses if you are not at fault in an accident.

Peace of Mind: Retaining DCPD ensures you won't face unexpected repair bills if you're involved in a not-at-fault accident. This peace of mind can be invaluable, as it protects you from the financial stress and inconvenience of having to pay for vehicle repairs out-of-pocket. 

Receive the Best Insurance Advice from BIG

As you can see, deciding whether to remove DCPD coverage from your auto insurance policy requires careful thought. While it might make sense for some, removing this coverage could lead to a significant financial burden for others, which is why weighing the cost savings against potential risks and benefits is essential. 

For personalized advice that will help you make an informed decision, contact a BIG broker. They will help you navigate the complexities of car insurance in Ontario, ensure you choose the best option for your needs, and find other ways to help you save on insurance without compromising coverage.