Alberta’s motor vehicle insurance policies have gone through some changes over the last couple of years. These changes can be confusing and aren’t always clearly laid out, leaving drivers uncertain of their new rights and obligations. One of these changes is a policy called “Direct Compensation for Property Damage,” or DCPD.
This mandatory policy came into effect in Alberta on January 1, 2022, and all vehicle policies automatically function according to this program. Due to this change, any property damage claims from a motor vehicle accident go through the driver’s insurance instead of the other driver’s insurer. This also applies to damage due to an accident that was not the driver’s fault.
Coverage by the DCPD policy applies to vehicle damages, content damages, and, if the insured was not at fault, loss of use. If the insured was partly at fault for the accident, repairs are covered based on the percentage that the insured was not at fault. Example: if the insured and another driver were equally at fault for an accident, the insured would have to pay 50% of the repairs, and DCPD will cover the remaining 50%.
In the case of an at-fault accident, any repairs required for the driver’s vehicle must be paid out of pocket unless the driver had additional collision coverage through their insurance policy. If such optional coverage exists, even if the driver was entirely at fault, they must only pay the deductible in place. The insurer will then take over all remaining repair expenses.
Despite this new policy, some things remain the same. For example, the driver’s insurer continues to cover expenses for necessary medical treatments after an accident, regardless of whose fault the car accident was. Drivers can also sue other drivers for personal injury damages if they were not at fault for the accident.
What is one of the biggest changes?
The new Direct Compensation for Property Damage system requires each driver’s insurer to consider the make and model of the car driven and then estimate potential repair costs for that particular vehicle. The premium that will be paid is based on that specific repair estimate. This means that those driving a less expensive vehicle will also pay a lesser premium toward their insurance policy’s property portion than someone who drives a more expensive vehicle which would be more costly to repair.
Before this new system, the average repair cost for a vehicle in Alberta was used in the insurance premium, as a driver’s insurer had to pay for repairs on someone else’s vehicle if the insured was at fault for the accident – and there was no way to know which type of vehicle the insured might get into an accident with and how much those repairs might cost.
Now, the insurer is responsible for only their own client’s car repairs and already knows approximately how much repairs should cost as they know the make and model of the insured driver’s vehicle.
How are premiums affected?
Using DCPD coverage will not affect premiums if the driver was not at fault for an accident, meaning that rates will not increase. If the accident is indeed the driver’s fault, they can expect their basic premiums and rates for additional coverage, such as Collision coverage, to increase.
We are here to help!
While we hope that you will never be in a car accident, our team at McGuiness Law is here to help you in the event that you do. We want to answer your questions and ensure that you are treated and compensated fairly.
We are passionate about helping every one of our clients and provide free consultations to answer any questions you may have.
To contact us, visit our website or call us toll-free at 1-833-585-4145.