We know car insurance isn’t exactly the most clickable topic when you’re scrolling through your morning news updates. But hear us out: it’s super important to keep track of government changes to car insurance in Ontario, since they can impact your coverage. What’s more, they can also affect your bank account!

That’s why we’re here to update you on the most recent 2024 change to Ontario’s Direct Compensation Property Damage coverage options. (This coverage is also known as DCPD).

The short of it: What’s changed about DCPD and your Ontario car insurance in 2024

As of January 1, 2024, Ontario car insurance customers can opt out of DCPD. The government introduced this change as a way for car owners to lower their car insurance costs. Before that date it was mandatory and automatically included in all car insurance policies across the province. DCPD is part of the no-fault insurance system that’s mandated in certain Canadian provinces, including Ontario.

This change has also introduced a new Ontario Policy Form for 2024, OPCF 49. If you decide to drop DCPD, you’ll have to provide written confirmation and sign a form acknowledging that you’re waiving this coverage.

There are some key things to consider before deciding to opt out, so let’s dig a little deeper.

What is no-fault insurance?

In the no-fault system, DCPD is the part of your Ontario car insurance that covers damage to your vehicle to the extent that you’re not at fault in a collision.

No-fault insurance is a system that was designed to make the claims process easier. With it, you deal directly with your own insurer for car accident claims, whether you’re at fault or not. How does it benefit you? First, it reduces administrative costs (including those darn lawyer fees if you had to sue someone). Second, you’ll get your claim resolved much more quickly. And the quicker your claim gets resolved, the sooner you’ll get any payout you could be entitled to. The no-fault system is in place in Ontario, Quebec, Alberta, British Columbia, Nova Scotia, New Brunswick, Newfoundland and Labrador, and PEI.

Heads up! B.C. has a no-fault system, but DCPD doesn’t apply. Instead, it has Basic Vehicle Damage Coverage (BVDC), which includes a max limit of $200,000 for vehicle-related damages.

How DCPD insurance works in Ontario

Time for a mini history lesson! In the past with Ontario car insurance, if someone hit your vehicle you’d have to go through their insurer, who would be responsible for paying the repair costs to your car. Trying to get a claim settled was a long, drawn out, back and forth process, often with lawyers (and lots of cash) involved – no fun for anyone. In 1990, the province introduced DCPD to help consumers save money and to help unclog the legal system, too.

These days, if you get into a car accident with another vehicle your insurer will investigate and use Ontario’s Fault Determination rules to figure out who was at fault. Sometimes, one driver is 100% at fault. Other times, fault is shared and each driver is assigned a percentage of fault.

How does fault sharing work? Let’s say you’re in the left lane and another driver’s in the right lane. The other driver tries to turn left (which they shouldn’t have done) and you don’t stop in time, causing you to hit their car. In this case, the rules could put you at 25% at fault. This means 75% of the damage to your vehicle would be covered by your DCPD. The remaining percentage that you are at fault (25%) would be covered by Collision or All Perils – if you have it. That’s why either of those coverages are also highly recommended for drivers.

What’s covered by DCPD car insurance in Ontario

To the extent you’re not at fault, DCPD covers:

• Damage to your vehicle, including loss of use. This means if you need a rental car while your car’s being repaired, your insurer will provide you with one.
• Damage to any personal property in the vehicle at the time of the accident.

Starting in 2024, how does opting out of DCPD insurance affect you?

While it may save you a bit of money in the short term, opting out of DCPD could have long-term costs. As a driver, it puts you at risk of having to pay out-of-pocket for expenses related to a crash where you’re not at fault.

You should think very carefully before removing DCPD from a vehicle. If you decide to opt out, here’s what you should know:

• You’ll have to pay to repair or replace your vehicle yourself – even if you’re not at fault in an accident.
• You won’t be compensated by anyone else’s policy.
• You can’t sue anyone to recover damages. This includes the person at fault for causing the damage. It also includes their insurer.
• You won’t be able to add Collision or All Perils coverage (or others).
• Any extras included with your DCPD coverage could be removed. These might include towing, storage, and a rental vehicle to use while your car’s being repaired.
• If your car is leased or financed, the contract with your lender or lessor might not allow it.

Does a DCPD claim affect my premium at my car insurance renewal?

No, DCPD claims generally don’t have an impact on your premium. Just another benefit of keeping it on your policy!

The bottom line

Even though as an Ontario car insurance customer you now have the option to drop DCPD from your policy, you must consider it very carefully. The fact is, most people don’t want to drain their savings to replace a car damaged in an accident that wasn’t even their fault! But ultimately, your coverages are up to you. That’s why it’s a good idea to speak with an agent or broker if you’re unsure about what you need (and what you don’t).

Want to ask us a question? Contact us! We’re here to help.