In January of 2022, Alberta adopted direct compensation for property damage (DCPD) auto insurance. This form of car insurance means that drivers who are not at fault in an accident will use their own insurance company to deal with the claim instead of having to go through the at-fault driver’s insurance. So what does this mean for you as a driver in Alberta?
What is DCPD and where is it available?
Direct compensation for property damage (DCPD) auto insurance is the standard in other public insurance provinces within Canada, including Ontario, Quebec, and Atlantic Canada. The Alberta car insurance system is playing a bit of catch-up by implementing the order this year.
Generally, DCPD insurance is a more streamlined way to deal with claims since individuals deal with their own providers for repairs. This means that there is less delay and fewer complications than when you’re dealing with another driver’s insurance.
As the Insurance Bureau of Canada points out, this method of dealing with claims is generally fairer and reflects a more customer-focused approach.
Why has Alberta added DCPD to the insurance system?
In 2020, the Government of Alberta took steps to stabilize the cost of auto insurance – the introduction of DCPD is part of this reformation.
As mentioned above, DCPD is already the auto insurance method used throughout other public insurance provinces – the Ontario car insurance system, Quebec car insurance system, and Atlantic Canada car insurance system already have it in place. Not only is it fairer for consumers, but it also helps to reduce the costs of determining who pays for a collision claim.
With the system being more efficient, reducing red tape, and being less expensive to recover damages from third parties, the implementation of DCPD insurance is a common-sense way to help stabilize the auto insurance market.
Do Alberta drivers need to do anything about DCPD?
The good news is that as a driver in Alberta, if you own a vehicle, you don’t need to do anything for DCPD to apply. Your personal car coverage won’t change, but the way damage claims are treated will.
If you’re in a collision, simply follow the same steps you always did in order to take care of the insurance claim.
Will this change affect the cost of car insurance in Alberta?
As a driver in Alberta, you stand a good chance of seeing no change or a reduction to your cost of car insurance premiums with the DCPD system in place.
Under the old system, insurance costs were used to subsidize the repairs of more expensive vehicles, offsetting the costs to the insurance provider. In other words, premiums were, in part, based on the chances of you being in a collision with a luxury automobile.
Generally, the more valuable the car, the more expensive it is to repair – insurance for a sports car will probably be more expensive than insurance for a Toyota. With DCPD insurance, if you drive a vehicle that is less expensive and costs less to repair, you will ultimately pay less for your insurance premiums. Since you are only dealing with your insurance provider – and not that of the automobile that hits you (in an accident where you are not at fault) – you will not have to worry about repairs to the other vehicle.
Under DCPD insurance, about 73% of drivers will see no or very little (+/- 5%) change in their insurance premiums. About 18% of drivers are estimated to see savings greater than 5% while 9% are expected to pay more than a 5% increase.
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DCPD in Alberta – what you need to know
With DCPD insurance, there are still a few things to keep in mind:
- Your right to sue for other damages is not impacted by DCPD being implemented
- You can choose what insurance company you deal with and what company handles your repairs
- You still need to purchase collision insurance if you want coverage for accidents in which you are at fault
The bottom line
As a driver in Alberta, DCPD means you’ll be dealing with your own insurer after a collision, even if you weren’t at fault. This creates a fairer system in terms of stabilizing the cost of car insurance rates – instead of accounting for the expensive cars you could potentially get into an accident with, your premium will be calculated based on your own vehicle. And since you’re free to choose your own insurance provider, you should shop around to make sure you’re getting the best rate – be sure to compare car insurance quotes with us and find the insurer that provides the best policy for all your specific needs.