Direct Compensation for Property Damage (DCPD)

Direct Compensation for Property Damage (DCPD) - Car Insurance Alberta

aka "Alberta No-Fault Insurance"

As a motor vehicle policy holder you may have received a notice in your policy renewal referring to a change to your policy regarding Direct Compensation for Property Damage (DCPD). Effective January 1, 2022 vehicle owners will work directly with their own insurance company in the event of an accident instead of the other party’s insurer. One would think that it would only make sense that you work with the insurance company that you chose to do business with in the first place. The aim of implementing the DCPD is to make way for a more efficient and customer based claims process. DCPD is also a mandatory coverage for all motor vehicle policy holders in Alberta.

DCPD vs. Collision Coverage

DCPD will respond to claims where you are not-at-fault in an accident. Please note that DCPD will only cover property damage such as vehicle repairs but will not pay for bodily injury as this still falls under liability coverage. Whilst DCPD covers not-at-fault property damage claims, Collision coverage covers repairs to your vehicle if you are at fault in an accident. Collision coverage is usually subject to a deductible which means that if you had a $500 deductible and you had an accident totaling $4000, you would pay the first $500 of that cost and the insurer would pay the remaining $3500. Luckily, there is no deductible at this time for DCPD. If you are partially responsible in an accident, let’s say 50/50, then DCPD would cover 50% of the cost (not-at-fault) and Collision coverage would cover the other half (at-fault). If you don’t have collision coverage then all collision related costs would be an out of pocket expense.

Is DCPD Really "No-Fault Insurance" in Alberta?

According to a recent article in Canadian Lawyer Magazine about the IBC, the IBC stated that "Alberta's new auto insurance system should not be confused with a no-fault auto insurance system."

“What’s really nice is vehicle owners don’t have to do anything. They have their insurance. When they’re involved in an accident, they just contact their own insurance provider, and that repair process starts a lot quicker,” said de Pruis.

How will DCPD impact your premium?

According to the Automobile Insurance Rate Board (airb) DCPD claims should not have a detrimental impact on your claims profile or result in higher premiums. If you are in an at-fault accident then that would likely result in increased premiums. DCPD also aims to make premium pricing more accurate by evaluating the type of vehicle you drive based on cost of repairs and how likely it is to be in an accident. The previous model was calculated using an average cost of vehicle repairs as the insurer would not be aware beforehand of what it would cost to repair another party's vehicle if you were at-fault in an accident. Now that the insurer knows the cost to repair your vehicle and the likelihood of you being in an accident it makes for a more pinpoint assessment under DCPD. With this new approach, according to the airb, approximately 15% of automobile policyholders should experience no change in premium, 42% will see a reduction and 43% will see an increase. The only way to know for sure how DCPD might affect your auto insurance rates in Alberta, is to get a car insurance quote.

We are still in the early stages of the DCPD in Alberta change and it will probably take some time to gather the relevant data to make a sound assessment of the change. Until then please reach out to your trusted insurance broker for advice or questions regarding this or any other insurance matter.