As of January 2024, drivers in Ontario will have the option to opt out of direct compensation property damage (DCPD) coverage, which protects drivers against costs related to vehicle damage from a collision if they are not at fault.
This coverage also covers the loss of the vehicle or its contents. While opting out will lower the driver’s bill, it also means they will not be reimbursed for vehicle repairs, loss of a vehicle or its contents, or a replacement vehicle, among other items. Experts warn that the risk is not worth the potential benefits.
The provincial government says the change is meant to increase consumer choice and could be useful for drivers of older cars that are worth less than the insurance cost.
“This is an important change the government is making to give drivers more options,” a spokesperson for the Ministry of Finance said in a statement.
It’s unclear how much drivers can save on average by opting out of this coverage, however Morgan Roberts, director of RH Insurance, says it’s likely “not a significant savings.”
“You’re opting out of any coverage in the event of…a not-at-fault-accidents,” she told CTV News Toronto.
“So if you’re not at fault for an accident that happens, you’re not going to be reimbursed for [the] replacement value of the vehicle. No loss or damage. There won’t be any repair costs, towing costs, anything like that. You’re opting out of all of it.”
MPP Tom Rakocevic, the Ontario NDP’s critic of auto insurance, told CTV News Toronto Monday that if the province really wanted to lower drivers’ bills, they would cap insurance rates.
Roberts stated that she can not imagine a situation in which opting out of DCPD would be advantageous, noting that the cost of towing or vehicle repair would likely outweigh the hundreds of dollars that may be saved annually.
According to a May report by Ratesdotca, insurance premiums in Ontario have increased by about 12% in 2023 compared to 2021, averaging at about $1,766. The GTA has the highest premiums, with costs exceeding $2,000 in Vaughan, Richmond Hill, Mississauga, Toronto, and Brampton.
“The regulator needs to step up and cap the amount of profits that they’re making off the backseat of drivers, who were being gouged and are paying the highest rates of anyone,” he said, stressing the answer is not to lower coverage for residents.
“Governments just simply don’t want to take on these insurance companies who are raking in record profits.”
DCPD coverage is normally one of the components of a basic auto insurance policy, along with third-party liability, statutory accident benefits, and uninsured motorist coverage.
The change is a part of a larger multi-year strategy that was first announced in 2019, which at the time included electric proof of insurance, improvements in rate regulation, and enabling insurance companies to offer more discounts and options.
