Direct Compensation Property Damage for Alberta Vehicle Claims | Lloyd Sadd
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Direct Compensation Property Damage for Alberta Vehicle Claims

Effective January 01, 2022, Alberta will adopt a Direct Compensation for Property Damage (DCPD) system, which will improve the way not at-fault vehicle claims are handled after accidents.


 What is Direct Compensation for Property Damage (DCPD) Insurance?

Under DCPD, you will deal directly with your own insurance company for the repairs to your vehicle and its contents when you are non-at-fault for a collision. In the past, if you were involved in a not at fault accident and used your own Collision or All Perils coverage to pay for the claim, the insurance company would pursue the responsible driver to recover the amount paid. This is known as subrogation. With DCPD, the right to subrogate has been removed. The expectation from this is that costs will reduce with less administration of claims as well as a more efficient and customer-focused claims process.

DCPD does not change your automobile coverage, only who pays for the damage to your vehicle during an accident and is only applied in situations with property damage to vehicles, equipment and/or their contents.


 How does DCPD Work ?

Under DCPD, if you are deemed not at fault for the collision, your DPCD coverage will cover the repairs to your vehicle.

If you are deemed partially at fault for the collision, your DCPD coverage will cover a percentage of the repairs to your vehicle based on the percentage you are found not at fault.

If you are deemed at fault for the collision, you do not have coverage under DCPD but would have coverage for the repairs if you purchased optional Collision or All Perils coverage, subject to the deductible.


Claims Examples

Here are a couple of claims examples to help you better understand how DCPD works in a claim situation.

Example 1: You are involved in an accident and your vehicle suffered a total of $12,000 in damage. It is determined that the other party is 100% at-fault for the accident. Your insurance company would pay the $12,000 in repairs, under DCPD.

Example 2: You are involved in an accident and your vehicle suffered a total of $60,000 in damage. It is determined you are 25% at-fault for the accident. In the new DCPD system, the damage would be covered as follows:

  •  At fault: 25% ($15,000) would be paid under the Collision or All Perils portion of your policy if this optional coverage was purchased, minus the Collision or All Perils deductible.
  • Not-at-fault: 75% ($45,000) would be paid by your insurance company under DCPD.


 What impact will DCPD have on insurance premiums?

DCPD better aligns insurance premiums with the costs associated with repairs for a vehicle. This means that, typically, owners of less expensive vehicles that cost less to repair, will pay less for their insurance. Insurers will be better take to into account the year, make and model of a vehicle in their premiums, as well as how likely it is that it will be involved in a collision and how expensive it will be to fix.

Under DCPD, 42% of drivers will see a reduction in their premiums and roughly 15% will see no change. An estimated 34% of drivers will see an increase in their premiums between 0% and 5%.

Chart depicting the impact on premiums for DCPD

 Why is Alberta moving to DCPD?

Under DCPD, damages to your vehicle will be repaired faster and without the delays and complications that can arise when dealing with another driver’s insurer. DCPD will reduce costs associated with subrogation and along with other reforms, it will help stabilize premiums for the long term. DCPD is already in place in Ontario, Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island and Quebec.


 When does DCPD coverage apply?

This mandatory coverage applies to all personal and commercial policies in Alberta effective January 1, 2022, regardless of when your policy renews.


 What types of vehicles and insurance policies are affected?

DCPD coverage will be mandatory on private passenger vehicles, commercial vehicles and fleets, motorhomes, motorcycles, and ATVs.


 What if the other vehicle involved in the accident does not have valid insurance?

All vehicles involved must have a valid insurance policy with Third Party Liability coverage. Unfortunately, if the other vehicle does not have valid insurance, you would need to have purchased Collision or All Perils coverage for the repairs to your vehicle.


 Who determines if I’m at fault?

The adjusters will determine fault based on the information provided from both parties involved in the collision, and the regulation in the Insurance Act of Alberta. Like today’s system, if you are deemed at-fault for an accident, the at-fault claim may impact your premium and driving record.


What if I am injured in a collision?

DCPD is specific to vehicle damages, contents, and loss of use of your vehicle only. Injury claims will still be handled under Third Party Liability coverage.


 Do I need to do anything?

There are no additional steps required to have DCPD coverage added to your automobile insurance policy. DPCD will automatically be added to your automobile insurance policy as of January 1, 2022. And as your Broker, we will help you navigate through these changes and will guide you through the new claims process.

If you have any questions or would like more information on the new regulations, please reach out to your Broker.