Direct Compensation for Property Damage (DPCD)

Overview

Direct Compensation for Property Damage (DCPD) was introduced as part of the Automobile Insurance Reforms announced in October 2020. DCPD replaced the property damage portion of the third-party liability coverage on a driver’s auto insurance policy effective January 1, 2022.

The main intent of this change is to provide Alberta drivers with an efficient way to process vehicle damage claims.

If a driver is in an accident, they will work directly with their insurance company instead of the other party’s insurance company. This allows for a more efficient and customer-focused claims process. DCPD is part of the mandatory coverage for Alberta drivers.

DCPD changes who pays, not what is paid for. 

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 that you are not at fault for an accident. If you are at fault for a portion of an accident, DCPD covers a portion of the repairs based on the percentage that you were not at fault for an accident. For example, if you are found 25% at fault for an accident, DCPD will cover 75% of the accident.

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

Refer to Purchasing 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 pay for your medical and rehabilitation expenses.

If you are found 100 per cent not responsible (not at fault) for an accident, any vehicle repairs will be paid for by your DCPD coverage. If you are fully or partially at fault for an accident, then your collision coverage applies:

• If you have collision coverage, it will pay for damage to your vehicle even if you are 100 percent 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 for repairs – before your insurance pays the rest.
• If you do not have collision coverage, you will have to cover any costs for damage to your 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 percent at fault, you will pay 50 percent of the damages, and your DCPD coverage will pay the other 50 percent.

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

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

1. Follow the proper procedures to collect required information and remain safe. Use the AIRB’s step-by-step guide.

2. Contact your insurance company to report the accident, regardless of who is at fault.
 

How do insurers assess responsibility in an accident?

Many factors help your insurance company 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 considered.

What information will insurers collect about the accident?

To determine responsibility, your insurance company first needs to collect all details about the accident. If required, your claim representative will ask you what happened and get statements from other drivers, witnesses, and passengers.

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.

How will your insurance premiums be affected?

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

However, if you are at fault in an accident, your basic insurance premiums will likely increase. The costs for any optional insurance, such as collision, may also go up. In general, the more accidents you are responsible for, the more you will pay in insurance.

One key change under DCPD is that 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.

Knowing the type of vehicle that will have to be repaired allows for more precise pricing. Your insurer will use vehicle rate groups to accurately identify the cost of repairing or replacing your vehicle. 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.

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.

Can I opt-out of DCPD coverage?

To allow for more consumer choice in Alberta, the Superintendent of Insurance released a DCPD deletion endorsement that can be adopted by insurers.

Some drivers would rather manage their own vehicle damage risk in exchange for a lower premium. If you would rather not have DCPD coverage due to your vehicle’s age or mileage, this endorsement may be a good option for you.

Ask your insurance broker, agent, or direct writer if your insurance company offers this endorsement and if it is applicable to your situation.