Direct Compensation Property Damage (DCPD): What It Is and Why You Need It
What is direct compensation property damage (DCPD)?
Direct compensation property damage (DCPD) is a form of no-fault auto insurance available in Canadian provinces without a public car insurance program. DCPD pays for repairs to your vehicle if it’s damaged in an accident that was not 100% your fault.
DCPD coverage relies on Ontario’s Fault Determination Rules, which insurance adjusters use to assign responsibility for a crash. Your ability to claim for damages under DCPD is proportional to your level of fault; if you’re 0% at fault, you can claim the full amount, but if you’re 75% at fault you’ll only be able to claim 25% of your costs.
Which provinces have DCPD?
DCPD coverage is mandatory in the following provinces in Canada:
- Alberta
- New Brunswick
- Newfoundland and Labrador
- Nova Scotia
- Prince Edward Island
- Quebec
When Ontario switched to a no-fault system in the 1990s, DCPD coverage was mandatory. That changed in 2024, when a new form was introduced (Ontario Policy Change Form 49) that allows drivers to opt out of DCPD coverage.
DCPD is still included by default in all car insurance quotes in Ontario, but you can choose to fill out the form and request its removal from your coverage if you want to waive the benefits of DCPD.
The public auto insurance programs in British Columbia, Manitoba, and Saskatchewan use a different framework to address costs associated with collisions, so DCPD coverage is not needed in these provinces.
How does direct compensation property damage work?
Direct compensation property damage coverage simplifies the car insurance claims process by allowing drivers to file with their own insurer for vehicle damage after a crash when another driver is fully or partially at fault.
When does DCPD apply?
To file a DCPD claim after a crash that damaged your vehicle, all four of the following things must be true:
- The accident took place in Ontario
- At least one other vehicle was involved
- At least one other vehicle involved in the crash is insured by a carrier licensed in Ontario or with an agreement with FRSA to provide this coverage
- You are less than 100% at fault
If even one of these things is not true—say, the crash took place in Manitoba, the accident was a single-car rollover, or you’re found to be fully at fault—DCPD coverage will not apply and your only option will be to file a claim using your collision coverage (if you have it).
Who pays for the damage?
If you have DCPD, your insurance company will pay for a portion of your vehicle’s repair costs relative to your degree of fault and up to your policy’s limits. If your costs aren’t fully covered by DCPD and you have collision coverage, your insurance policy may cover the remainder of your costs.
The table below compares the portions of your repair costs that DCPD and collision or all perils insurance would cover in an accident that resulted in $5,000 of damage to your vehicle based on your degree of fault.
* DCPD and collision coverage payouts are subject to the coverage limits on your policy. Check your policy documents to find the limit of both types of coverage.
Take note: If you opt out of DCPD using OPCF 49, you also opt out of collision coverage. OPCF 49 constitutes a formal agreement with your insurance company that you won’t seek reimbursements for any damage to your vehicle caused by a collision, regardless of fault.
You’ll also opt out of the right to recover repair costs from the at-fault driver’s insurance company through third-party liability insurance.
If you opted out of DCPD and collision coverage, your out-of-pocket costs in the example above would be $5,000 no matter what fault determination was assigned.
How insurance companies assign fault
Fault determination isn’t arbitrary in Ontario. After any collision, your insurance company will assign an adjuster to your claim. That adjuster’s job is to determine who was at fault using Ontario’s Fault Determination Rules as spelled out in Ontario’s Insurance Act.
Ontario’s Fault Determination Rules are essentially a series of 20+ possible crash scenarios, many of which have accompanying diagrams. For each scenario, the Fault Determination Rules specify the fault assigned to each driver.
The Fault Determination Rules primarily focus on:
- Where each vehicle was on the road
- The direction(s) in which the vehicles were traveling
- How the vehicles were moving (e.g., turning, overtaking, entering a roadway, backing up)
- Whether either driver violated driving regulations or ignored pertinent signage
Insurance adjusters will take all the evidence regarding your collision provided by your claim, the other driver’s claim (if applicable), police reports, and other sources and find the closest match in the Fault Determination Rules. Based on that match, they’ll assign your level of fault as well as the fault of the other driver.
If you disagree with the claims adjuster’s determination of fault, you can ask them to explain their logic and identify the rule used to make the judgment. If you still believe the judgment is unfair, you can request that it be changed or appeal to your insurer’s complaint officer.
How DCPD works: An example
Let’s say you’re turning left at an intersection, but hit a car trying to overtake you on the left. According to Ontario’s Fault Determination Rules, you’d be 25% at fault for that accident, while the other driver would be 75% at fault.
If the accident took place in Ontario and both drivers have Ontario auto insurance, DCPD comes into play.
Because you’re only 25% at fault, DCPD will cover 75% of your repair costs up to your policy’s limits, subject to a deductible if you have one. If your repairs cost a total of $7,000 and you have a $500 DCPD deductible, DPCD would cover $4,750.
If you have collision insurance, that coverage may cover the remaining $2,250, minus your collision deductible. If you don’t have active collision coverage, however, you’ll be left to cover the remaining $2,250 out of pocket.
What does DCPD cover?
DCPD insurance covers:
- Vehicle repairs, including body and structural damage
- Personal property inside your vehicle
- Towing and storage fees
- Loss of use, including rental car fees
- Damage from falling objects during a multi-vehicle accident
Coverage may be subject to a deductible or to policy limits.
DCPD will not cover:
- Any vehicle damage if you’re determined to be 100% at fault in an accident
- Vehicle damage caused outside of Ontario
- Hit-and-run incidents
- Single-car accidents (e.g., rollover)
- Medical bills
- Pain and suffering
DCPD vs. collision coverage: What’s the difference?
The key difference between DCPD and collision coverage lies in how fault is determined.
DCPD is no-fault insurance; it will only cover vehicle damage in accidents where you are less than 100% at fault. Collision insurance, on the other hand, applies regardless of fault. If you’re partially or fully at fault, you can use collision coverage to pay for your repairs up to your policy’s limits.
Is DCPD mandatory?
Direct compensation property damage is not mandatory coverage in Ontario, but waiving this coverage could put you at serious financial risk.
From 1990 to 2024, DCPD was mandatory in Ontario. Effective January 2024, however, Ontario drivers can now opt out of DCPD coverage using Ontario Policy Change Form 49 (OPCF 49). By waiving DCPD coverage, Ontarians also waive collision coverage.
Today, DCPD is still a standard option that you’ll see included by default in all car insurance quotes in Ontario. If you don’t choose to fill out a waiver form, you’ll have DCPD coverage.
Virtually all insurance professionals recommend keeping DCPD coverage on your auto insurance policy. The primary reason to waive DCPD is to reduce auto insurance costs—but because waiving DCPD also means waiving all collision coverage, the risks of skipping this coverage may be greater than the benefits.
How does DCPD affect your premium?
DCPD contributes to a portion of your car insurance premiums, which are based on:
- Your coverage selections
- Your age and driving experience
- Your driving history and habits
- Your location
- Your vehicle
Your coverage choices are just one of the factors that impact your insurance rate, and DCPD coverage is just one part of your coverage. While waiving DCPD can produce some cost savings, the impact may not be significant for all drivers.
DCPD may also impact your insurance costs if you’re found to be partially at fault for an accident. If your fault is determined to be 50% or more, you’ll generally see an increase in your car insurance premium at your next policy renewal.
Should you adjust your coverage if you have DCPD?
If you have DCPD coverage, there are a variety of adjustments you may choose to make to your policy.
- Do you still need collision coverage? Yes, collision coverage is still typically necessary even if you have DCPD coverage, especially if you have an auto loan or lease. If you’re partially or fully at fault for an accident, DCPD won’t cover your full repair costs, but collision coverage can fill this gap.
- Should you choose DCPD with a deductible? DCPD coverage isn’t subject to deductibles by default, but you may have the option to apply a deductible (typically $500) to this coverage in order to share the cost of a not-at-fault accident and reduce your ongoing insurance costs.
- Can you lower your premiums with DCPD? Discounts, home and auto bundles, and adjustments to your deductibles for collision and comprehensive insurance may all help to reduce your costs.
FAQ: Direct compensation property damage
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.