DCPD coverage explained

Reviewed by Daniel Mirkovic

Updated April 24, 2024 | Published November 2, 2023

Direct Compensation Property Damage (sometimes Direct Compensation for Property Damage) is a form of car insurance coverage in several Canadian provinces. It’s almost always shortened to “DCPD.” In Quebec it’s known as the Direct Compensation Agreement. DCPD covers repairs to the insured vehicle under certain circumstances, and it’s mandatory in almost every province that uses it.

On this page, you’ll learn how DCPD coverage works and what it covers.

A grey SUV with damage to the front fender and headlight

What is DCPD?

DCPD is a type of car insurance coverage that exists in many provinces that don’t have public auto insurers. Alberta, Ontario, Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador, and PEI all have DCPD systems. In most places, DCPD is mandatory. However, drivers in Ontario and Alberta have the option to opt out of the coverage.

DCPD covers damage to the insured vehicle, but only damage sustained in an accident for which the driver is not at fault. When it applies, DCPD also covers loss of use of the insured vehicle (for example, the cost of a rental car or taxi).

If you make a claim under DCPD coverage, it’s your own insurance provider that will cover the costs for which someone else is at fault. Unlike other car insurance systems, there’s no need for you to personally to chase down at-fault drivers or deal with their insurers.

How does DCPD work?

When you’re in a vehicle accident, DCPD will cover the cost of repairing or replacing your vehicle—but only if you’re not at fault for the accident. If you are at fault, you would need to have collision coverage or all perils coverage instead.

If you’re in an accident, and another driver is 100% at fault, the process is easy: you simply start a claim with your insurance provider, who will cover the cost of repairing your vehicle under DCPD. If, however, you are 100% at fault for the accident, DCPD would not apply. In this case, the damage would only be covered if your policy included collision coverage, which is optional.

What if you’re partially at fault for an accident?

Let’s say you’re in an accident with another vehicle, and each driver is 50% at fault. In this case, your insurer would pay half of your repair costs under DCPD, and the other half under your own collision coverage (if you have it). If you didn’t have collision coverage, you would have to pay 50% of the repair costs yourself.

DCPD and deductibles

A deductible is the amount of money that you’ll pay when you make an insurance claim before your policy pays the remainder.

There is typically no deductible to pay for DCPD claims. Sometimes, you can choose to add a DCPD deductible to your policy to reduce your premiums.

If you’re making a claim that involves both DCPD and collision coverage (as in the prior 50/50 fault example), the deductible situation is a little more complicated.

Let’s say your policy has a $0 DCPD deductible and a $500 collision deductible. You’re 50% at-fault for an accident. In this situation, DCPD would pay for half the repairs with no deductible, and collision coverage would pay for the other 50%, but you would pay 50% of your collision deductible (in this case, $250).

So, if the repairs cost $5,000, it would look like this:

DCPD pays $2,500 (50% of repairs)

Collision pays $2,250 (50% of repairs, minus 50% of the $500 deductible)

In summary, your policy pays $4,750 for the repairs, and you pay $250 of your collision deductible.

Determining fault

When it comes to vehicle accidents, assigning fault to each driver involved is an important part of the insurance process. While it seems complicated, each province has very detailed rules for determining fault that streamline the process.

For example, Ontario’s fault determination rules describe a range of traffic scenarios that assign each driver 0, 25, 50, 75, or 100 percent fault for an accident. Similar rules exist in Alberta, Quebec, and other provinces.

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When does DCPD apply?

We’ve established that DCPD covers damage from accidents for which you’re not at fault. But there are a few other conditions that must be met in order for a driver to claim DCPD coverage.

For example, aside from being not-at-fault, these are the conditions that must be met for you to claim DCPD coverage in Ontario:

  1. The accident must take place in Ontario.
  2. There must be at least one other vehicle involved in the accident.
  3. Aside from your own vehicle, at least one other involved vehicle must be insured by an insurer licensed in Ontario.
  4. The vehicles involved must be identified.

Similar conditions exist in other DCPD provinces.

If your vehicle is damaged but these conditions aren’t met, you may still be able to have the repairs covered by collision coverage if you have it. For example, if your car were damaged in a hit-and-run, there would be no identifiable at-fault party, and DCPD wouldn’t cover the repairs. Same thing if the damage were caused by an out-of-province vehicle.

Commonly asked questions

Does DCPD cover theft?

No, DCPD does not include any coverage if a vehicle is stolen. To cover theft of the vehicle, purchase comprehensive, specified perils, or all perils coverage.

Does DCPD cover hit and run?

No, DCPD does not cover damage resulting from hit and runs. For DCPD coverage to apply, the vehicles and drivers involved in the accident must be identified. Hit and run damage falls instead under collision coverage, or specific unidentified driver coverage.

Does DCPD have a deductible?

Most of the time, there is no deductible associated with DCPD coverage. Some insurance providers offer the option to add a DCPD deductible in exchange for lower premiums. However, this option isn’t always available. If you do choose a deductible, remember to keep it low enough to be affordable if you are involved in a claim tomorrow — otherwise you could be in a difficult financial position even if someone else is at fault.

Is DCPD mandatory?

There are five provinces in which DCPD coverage is mandatory: Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador, and PEI. Any vehicle insured in any of these provinces will need to have DCPD coverage.

As of 2024, drivers in Ontario and Alberta have the option of declining DCPD altogether. This means that drivers who are willing and able to pay the cost of any physical damage out-of-pocket can decline DCPD coverage. However, we do not recommend that customers delete DCPD coverage: even though you may believe you can afford out-of-pocket losses today, circumstances change over time, and you may not be in the same financial position when an accident happens.

Want to learn more? Visit our Car insurance resource centre for dozens of helpful articles to guide you through the complexities of car insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized car insurance can be.

About the expert: Daniel Mirkovic

A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.

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