It has been more than six months since Ontario’s insurance regulator passed OPCF 49, which gives consumers the choice to opt out of Direct Compensation Property Damage (DCPD) coverage on auto policies. The response? Let’s take a closer look at whether or not Ontario drivers are opting out of DCPD coverage.
Why introduce OPCF 49 in the first place?
As any driver in Ontario can tell you, car ownership has become very difficult. From the crippling traffic congestion, vehicle shortages, and rising cost of auto repairs due to low pandemic inventory, driving isn’t as enjoyable as it once was.
Ontario has been through many auto insurance reforms over the past decade or so, largely due to how expensive auto insurance is in Ontario. Attempts to rein in fraud, reduce accident benefits coverage, and mandate rate decreases across the board have had some positive success. However, the Ontario Government added one more cost-saving option in the OPCF 49.
So, what is the impact of OPCF 49?
For all the discussion it provoked within brokerage circles, the Ontario government’s OPCF 49 auto insurance reform appears to have fallen flat with drivers. In the first month since its arrival, Ontario brokerages report seeing very few consumers elect to opt out of Direct Compensation-Property Damage (DCPD) coverage for their cars. The elective DCPD policy option went into effect on January 1, 2024. Brokers are citing that clients have very little interest in opting out of DCPD coverage. “We’ve seen one client out of over 20,000 policies opt out of their DCPD coverage. So, we haven’t seen a large uptake as of yet,” Theresa Wicks, Sales Manager at Mitch Insurance said earlier this month. CU. Wicks observed that neither existing customers nor new business prospects seemed particularly interested in opting out of DCPD coverage. On a province-wide scale, brokers report uptake has been low.
Brokers tell IBAO that in almost all cases, once clients were informed of what coverage and benefits the OCFP 49 removes, they lost interest in the product.
What does it mean to unselect DCPD or opt into the OPCF 49 endorsement?
If you are in an accident for which you are not at fault, or partially at fault, you will be responsible for the following costs:
- No claim reimbursement for repair costs.
- If the car is a total write-off, you won’t get its value back.
- No compensation for the days your vehicle is in the shop for repairs.
- Car rental fees will not be subsidized.
- The contents of your car – any damage or loss won’t be covered.
Nevertheless, if you decide to step away from DCPD coverage, just remember that it doesn’t have to be forever. You always have the option to reinstate it in your insurance policy. But it’s worth noting that if you choose to reinstate it, you’ll need to catch up on the premium difference.
Who will benefit from opting out of DCPD coverage?
Owners of older vehicles
The industry has discussed scenarios in which OPCF 49 might be beneficial. This is namely for those drivers who own older vehicles that are worth less than the cost to insure them. Owners of older cars or vehicles with minimal value might decide that the cost of DC-PD coverage isn’t justifiable. In addition, if they own one or multiple vehicles that aren’t worth much, the owner may feel that potential damage costs won’t significantly impact them financially, making the insurance for such events less necessary.
Drivers willing to take the risk
Some drivers might assess their risk of being in a not-at-fault accident as low, especially if they have a strong driving record, drive infrequently, or in areas with low traffic. They figure the risk of being in a not-at-fault collision is low, so why pay for protection they might not need?
When budgets are tight, every penny counts. For people prioritizing other financial needs, cutting down on insurance expenses, even temporarily, can provide some much-needed relief. Without DC-PD coverage, drivers are on the hook for all repair or replacement costs if in a not-at-fault accident. It’s a classic case of balancing immediate savings against potential future costs. However, brokers aren’t keen to suggest it to their clients unless they are sure they can afford to pay out of pocket for a car wreck.
Opting out of DCPD coverage: Final thoughts
With OPCF 49, the Ontario government is allowing Ontario residents to opt out of paying for damages to their vehicles if found at fault. The OPCF 49 endorsement puts a heavier burden on you to repair or replace your vehicle, find alternate transportation, and deal with not only the repair shop but the rental agency, as well. Many drivers, upon weighing up the costs and consequences, seem to be content with shelling out for DCPD coverage after all.
If, however, you think this might be the right choice for you, consider speaking with a licenced isure broker before making any sudden decisions. We can help you understand how this choice may affect your insurance. As a result, we’ll work hard to help you find the best car insurance quotes from top insurance companies in your area.
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