What exactly is DCPD coverage?

Direct Compensation Property Damage is when your insurer pays for your vehicle (property) repairs after a collision. In the provinces with a no-fault insurance system, DCPD is one part of a basic auto insurance policy. It works in conjunction with other mandatory coverages, such as:

It offers coverage in the event that you are in a not-at-fault accident. DCPD has been a mainstay in Ontario auto insurance coverage. However, The Financial Services Regulatory Authority of Ontario (FSRA) announced that the Ontario Policy Change Form (OPCF) 49 will now allow drivers to opt out of DCPD coverage. This means that Ontario drivers will soon have a new option when it comes to claiming coverage in a collision: The option to claim no damages at all.

6 things to know about DCPD

DCPD better aligns insurance premiums with the costs for repairs of a vehicle. This means that owners of less expensive vehicles to repair will pay less for their insurance. Similarly, owners of more expensive vehicles that are costly to repair may pay more – meaning a fairer system for everyone:

If you have a not at-fault collision, you can arrange vehicle repairs with your own insurance company, not someone else’s.
DCPD does not impact your right to sue for other damages, like injuries.
If you are not at-fault for a collision, DCPD covers your vehicle damages, loss of use and any contents that are damaged. You still need to purchase collision coverage to have repairs completed when you are at-fault.
Vehicle owners choose their insurance provider, which means you decide which company handles the vehicle repair process.
DCPD regulation provides transparency when determining fault for a collision.
Ensures a more efficient process for vehicle repairs, since you don’t have to wait for someone else’s insurance company to start the process.

When can I access DCPD coverage?

In order for you to access DCPD coverage in Ontario, there are four criteria that must be met:

Not at-fault: You must not be at-fault for the accident. At-Fault Accident Determination Rules under the Insurance Act are important to assess who is responsible for the collision.
Vehicle involvement: One or more vehicles must have involvement in the accident.
Insured: The vehicles in the accident must be identifiable and legally insured in Ontario.
Location: The accident must happen within Ontario.

Is DCPD the same as Collision Coverage?

No. It is different from collision coverage. As an optional add-on endorsement to your policy, collision covers you for damages arising in at-fault collisions. DCPD, on the other hand, entitles you to recover damages (less your deductible) from your insurance company. The stipulation is that you are not at-fault. The collision must happen in Ontario and the other driver must be insured in Ontario.

What does the OPCF 49 endorsement do?

In short, what this endorsement or ‘add-on policy change’ means is that in the event of a collision where you are at-fault, you can choose not to be compensated for costs related to the accident.

The OPCF 49 form states: “Not being compensated means you will not be reimbursed for any loss or damage to the described automobile, including”:

Repair costs
The value of the vehicle
The loss of use of the vehicle
A replacement for the vehicle
Loss or damage to any one of the vehicle’s contents

To download the OPCF 49 form, please click here.

If you lease or finance the vehicle, you should not sign this form without consulting with the lease or financing company because you may be personally responsible for its loss or damage.

Important to note: After you opt out of DCPD coverage, you may choose to reinstate it back into your policy. You will be required to pay the difference in premium later. Unless you reinstate DCPD, your insurance company has no obligation to help you with any damages in the case of a not-at-fault collision. Under OPCF 49, you also agree not to claim reimbursement from other parties involved in the accident. This will include the driver found at-fault for the collision in the first place. In a nutshell, all policies sold in Ontario must include DCPD, which covers your car if you’re not at-fault. As of January 2023, this will no longer be the case.

Benefits of choosing to opt out of DCPD coverage

The ability to opt out of DCPD was introduced to give drivers more flexibility in their coverage. This can also help keep your auto insurance rates low. Ontario’s insurance regulator, FSRA, indicates on its website it worked with the province’s property and casualty industry to come up with a way for consumers to opt out of DCPD coverage:

Reduce premiums: Since DCPD is still managed by your insurance company, you can potentially save 5-10% of your total annual premium if you opt out of this coverage. It depends on the market and company.
Owners of older vehicles: While it may sound like an ideal way to cut your monthly costs, this endorsement only benefits drivers who own vehicles with little to no resale value.
You can afford the accident: It is also beneficial to drivers who will not be financially impacted by any loss or damage to their vehicle if they have to pay out of pocket for repairs.

Insurance Bureau of Canada says the DCPD changes will enable customers to “manage their own premiums and to exercise choice for insurance products tailored to their unique needs”.

What are the downsides to opting out of DCPD with OPCF 49?

While it may offer more choices, it also places a greater burden on you, the driver, if an accident occurs. The form states, “Even though you are not at-fault, your insurance will not cover this or help you with the loss.” Here are some cons to the OPCF 49 endorsement:

You are responsible for repairs and transportation costs: Without DCPD coverage, you must arrange and pay for your own vehicle repairs, towing, rental car, and storage costs out of pocket.

Potential Delays in Repairs: Vehicle repair timelines may still be lengthy due to factors such as parts availability and high demand at repair shops. While the efficiency of vehicle supply chains has improved in recent years, delays can last several weeks. Loss-of-use coverage (OPCF 20) is an optional add-on for most policies, and often has a standard cap. The driver is then left to handle car rental fees on their own.

Car rental fees: Last August, CBC reported rental prices of over $2,000 a month for a basic sedan, and short-term fees of over $120 per day, with no foreseeable relief anytime soon.
Can’t afford to be in an accident: For lower-income families, the cost to pay for repair or replacement costs of theircome back to hurt them, ultimately making the situation more financially detrimentalto hurt them if they find themselves in an accident, ultimately being a more financially detrimental.

Should you opt-out of DCPD coverage?

With OPCF 49, the Ontario government is allowing Ontario residents to opt out of paying for damages to their own vehicle if found at-fault. Unlike removing your collision coverage, the OPCF 49 endorsement places a greater burden on you to:

Repair or replace your vehicle
Find alternative transportation
Deal with both the repair shop and the rental agency

The OPCF 49 endorsement should only be an option if you are financially stable enough to replace your vehicle for the amount you might save.

Takeaways about Opting Out of DCPD Coverage with OPCF 49

If you are looking to reduce your monthly auto premiums, we have several resources to help you save. A deal is only a deal if you come out better on the other side of it. For many, opting out of DCPD coverage may result in the opposite occurring. When looking for the best coverage for you, our licensed isure representatives are just a call away.