What is direct compensation property damage?
This is the “phew” type of insurance. DCPD automatically covers your repair bills after an accident, and pays you directly when someone else causes a collision and damages your car. (Not exactly what you want to be dealing with after a car accident that that wasn’t your fault.) Your insurance company will then ask that driver and their insurance provider for reimbursement, so you don’t have to take on that hassle. It kicks in only when an incident happens in a province that has DCPD and it is one part of a basic no-fault auto insurance policy, which also includes the following:
- Third-party liability insurance covers the damage to a person’s car or property, their medical care and, in the worst-case scenario, their funeral, when you cause an accident. (Learn more about third-party liability.)
- Uninsured motorist, also known as uninsured auto insurance, covers the damage to your car and property, medical care and in the worst case scenario, your funeral, when an uninsured or hit-and-run driver causes an accident. (What else you need to know about uninsured auto insurance.)
- Accident benefits insurance pays the bills for medical services—not provided by your provincial healthcare system—that you may need after an accident (think physiotherapy or an at-home care worker).
What is covered by DCPD?
After a collision, the DCPD acts as property damage coverage (for cases such as a torn-up lawn or fence as a result of an accident) and auto insurance policy that ponies up for repairs. It generally comes with a zero deductible so you won’t be out-of-pocket when you need to fix up your ride.
“The benefit of this coverage is that it’s designed to speed up the resolution of your claim,” says Pete Karageorgos, director of consumer and industry relations Ontario for the Insurance Bureau of Canada (IBC). “The savings is for the consumer. You don’t have to hire a lawyer and pay for the lengthy court process.”
What isn’t covered by DCPD?
Bad news: You’re out of luck if it’s a hit-and-run. Like a game of Among Us or Clue, when you can’t identify the culprit, you won’t win any car or property damage insurance. This is when you need collision insurance to pay for the damage, which is optional and comes at an extra cost. It pays for repairs when you hit or are hit by a car or object (think a tree or a lamp post) while you are driving.
There’s usually a deductible with collision and the limit depends on the policy you bought. Generally though, the bigger your premium, the less your deductible will be. And, you guessed it, the lower your premium, the more your deductible will be. While collision coverage pays for damage to your car, the uninsured motorist part of your no-fault insurance policy will cover medical needs if you are injured by a hit and run driver.
Who needs this coverage?
In Ontario, Quebec, Nova Scotia, New Brunswick, Newfoundland and Prince Edward Island, DCPD is mandatory. “It lessens the impact of having to make a claim, launching a suit, going through the courts and tying up court resources,” Karageorgos explains. (If you live in a province or territory outside of theses listed, DCPD does not exist in your area.)
The upside to a DCPD policy is that there’s no time wasted chasing down various insurers and payments because you’re only dealing with one insurance company—your own. (There’s that “phew” again.)