Ontario drivers will soon be able to reduce their auto insurance payments by opting out of certain coverages. But experts warn that the risk isn’t worth the potential reward.
From January 2024, drivers will be able to opt out of Direct Compensation Property Damage (DCPD) coverage, which protects car owners from the costs associated with damage to their vehicle in a collision if they are not at fault.
This cover also covers the loss of the vehicle or its contents.
While opting out will reduce the driver’s bill, it also means they will not be reimbursed for vehicle repairs, loss of the vehicle or its contents, or a replacement vehicle, among other things.
“If the described vehicle is damaged in a collision, the loss will not be compensated, even if you are not at fault,” the opt-out form warns. “You will not be compensated by this policy or by anyone else, including the person who caused the damage or their insurance company.”
The provincial government says the change is designed to increase consumer choice and could be useful for drivers of older cars that are worth less than the cost of insurance.
“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 cover, but Morgan Roberts, director of RH Insurance, says it’s unlikely to be “a significant saving”.
“You’re opting out of any coverage in the event of … a no-fault accident,” 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 that.”
Roberts said she couldn’t imagine a scenario in which opting out of the DCPD would be beneficial, noting that the price of towing or repairing a vehicle would likely outweigh the hundreds of dollars saved annually.
According to a May report by Ratesdotca, insurance premiums in Ontario have increased by about 12 per cent in 2023 compared to 2021, averaging about $1,766.
Premiums are particularly high in the GTA, with costs exceeding $2,000 in Vaughan, Richmond Hill, Mississauga, Toronto and Brampton.
MPP Tom Rakocevic, the Ontario NDP’s auto insurance critic, told CTV News Toronto on Monday that if the province really wanted to reduce drivers’ bills, it would cap insurance rates.
“The regulator needs to step up and cap the amount of profit they’re making off the backs of drivers who are being gouged and paying the highest rates of anyone,” he said, insisting the answer is not to reduce coverage for residents.
“Governments just don’t want to take on these insurance companies that are making record profits.”
The changes are part of a wider multi-year strategy first announced in 2019, which at the time included electronic proof of insurance, improved rate regulation and allowing insurers to offer more discounts and options.
DCPD cover is typically part of a basic car insurance policy, along with third party liability, statutory accident benefits and uninsured motorist cover.
