Learn about Direct Compensation for Property Damage (DCPD) including how your insurance premiums may be affected by a DCPD claim and how fault is determined.
Direct Compensation for Property Damage (DCPD) was introduced as part of the Auto 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.
DCPD coverage is mandatory. It covers your vehicle damage, damage to contents, and loss of use if 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 the accident.
For example, if you are found to be 25% at-fault for an accident, DCPD will cover 75% of the accident. You will still be responsible for paying 25% of the damage to your vehicle, unless you have collision coverage.
Collision coverage is optional. It covers your vehicle damage, costs of towing, storage, and salvage disposal if you are at-fault for an accident. If you are at-fault for any portion of a collision, you will have to pay a deductible, but collision coverage pays the rest.
For example, if you are found to be 25% at-fault for an accident, DCPD will cover 75% of the accident, and collision (if you have it) will pay for 25% of the accident, minus the deductible.
If you do not have collision coverage and are at-fault, you will have to pay out-of-pocket for any damage to your vehicle. You will need to pay the percentage of the vehicle repairs equal to the percentage you are found at-fault.
Deductibles will vary by insurer and vehicle category. Contact your insurance representative to learn how deductibles may save you money and whether they are right for you.
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 optional insurance, such as collision, may also increase. In general, the more accidents you are responsible for, the more you will pay in insurance premiums.
One key change under DCPD is that you will pay a premium based on the 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 estimate the cost of repairing or replacing your vehicle. Vehicle rate groups classify vehicles based on repair costs 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.
To allow for greater consumer choice in Alberta, the Superintendent of Insurance released a DCPD deletion endorsement that insurers can adopt.
Some drivers would rather manage their own vehicle damage risk in exchange for a lower premium. If you would prefer not to have DCPD coverage due to your vehicle’s age or mileage, this endorsement may be a good option.
Ask your insurance broker, agent, or direct writer if your insurance company offers this endorsement and if it applies to your situation.
Many factors help your insurance company determine responsibility (aka. fault) in an 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: