Direct Compensation for Property Damage (DCPD)

Index

DCPD Overview

Direct Compensation for Property Damage (DCPD) was introduced as part of the Automobile Insurance Reforms announced in October 2020. DCPD will replace the property damage portion of the third party liability coverage on your automobile insurance policy effective January 1, 2022. The main intent of this change is to provide consumers with an efficient way to process vehicle damage claims.

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What does this mean for drivers?

Under DCPD, vehicle owners will work directly with their own insurer instead of the other party's insurer in the event of an accident.

This allows for a more efficient and customer focused claims process. DCPD is part of the mandatory coverage for Alberta drivers.

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What does DCPD cover?

DCPD vs. optional Collision coverage

DCPD coverage is mandatory. It covers your vehicle damage, damage to contents and loss of use in the event you are not at fault for an accident, or a portion of the repairs based on the percentage you were not at fault for an accident.

Collision and loss of use coverages are optional. If you are at fault, Collision covers your vehicle repairs. Standard Endorsement Form #20 (loss of use) covers the loss of use.

Refer to Getting Insurance on our website for more information on the insurance coverages.

Damage to you and your vehicle

Regardless of who is at fault for the accident, your accident benefits coverages will pay for your medical and rehabilitation expenses.

If you are found 100% not responsible (not at fault) for an accident, any vehicle repairs will be paid for by your DCPD coverage.

  • If you have Collision coverage, it will pay for damage to your vehicle even if you are 100% responsible (at fault) for the accident. It also covers the costs of towing, storage and salvage disposal. You will have to pay a deductible - the amount you have to pay toward repairs - before your insurance pays for the rest.

  • If you don't have Collision coverage, you will have to cover any costs for damage to your own vehicle out of pocket. You will need to pay the percentage of the vehicle repairs, equal to the percentage you are found responsible or at fault. If you are 50% at fault, you will pay 50% of the damages, and 50% will be paid through your DCPD coverage.

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What are my responsibilities if I am involved in an accident?

If you are involved in an accident, it is your responsibility to:

  1. Collect information on what happened - refer to the step by step guide (PDF) of what to do and what information you need for insurance purposes.
  2. Contact your insurance company to report the accident, regardless of whom is at fault.

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How insurers assess responsibility in an accident

Many factors help your insurer determine responsibility (also known as fault or liability) in an accident.

Legislation covering the rules of the road, previous court cases, and information about the accident are all taken into account.

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What information will insurers collect about the accident?

To determine responsibility, your insurer first needs to collect all details about the accident. Your claim representative will ask you what happened and get statements from other drivers, witnesses and passengers if needed.

Your claim representative may also:

  • review police reports
  • consult with the estimator who reviewed the vehicle damage
  • review the rules of the road (as set out in the Traffic Safety Act and Use of Highway and Rules of the Road Regulation)
  • review the Direct Compensation for Property Damage Regulation, and
  • look at past court decisions for similar accidents.

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How your insurance premiums are affected

If you are 100% not at-fault in an accident, accessing your DCPD coverage will not adversely affect your claims profile or result in higher premiums.

If you are responsible for an accident, your Basic insurance premiums will likely go up. The costs for any optional insurance you have (Collision, for example) may go up as well. In general, the more accidents you are responsible for, the more you will pay in insurance.

One key change under DCPD is you will pay a premium based on what vehicle you drive. Your insurer pays to repair your vehicle when you are not at fault. This is the main difference from the previous third party liability property damage coverage, where your insurer was responsible for paying to repair someone else's vehicle if you were at fault. There was no way for your insurer to know what other vehicle may be involved in an accident, so your third party liability property damage premium was based on an average cost of repairs for the vehicle you may have had an accident with.

The certainty of the vehicle covered by DCPD allows for more precise pricing. To accurately price for the costs to repair or replace your vehicle, your insurer will use vehicle rate groups. Vehicle rate groups classify vehicles based on the price of repairs and the likelihood of being involved in an accident. Generally, the lower the vehicle rate group, the lower the DCPD premium. The Insurance Bureau of Canada publishes data on each vehicle model and year's rating - How Cars Measure Up.

All insurers were required to file to amend their rating program to reflect DCPD. Based on the mandatory filings received by the AIRB, with premiums for a $0 deductible, 15% of policyholders will see no change, 42% will see a decrease, and 43% will see a premium increase as a result this change.

Deductibles will vary by insurer and vehicle category. Contact your insurance representative if you want to find out how deductibles may save you money, and if they are right for you.

Chart: How your insurance premiums are affected

Click here for a larger version of this chart.

Chart: Effect on Premiums - Direct Compensation for Property Damage (DCPD)

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Accident examples

You may find it helpful to review these accident examples. They are based on the Direct Compensation for Property Damage Regulation, which your insurer's claim representative uses to assess responsibility.

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