As of January 1, 2024, Ontario’s insurance regulator followed through on a provincial government pledge to reduce the cost of auto insurance by making Direct Compensation-Property Damage (DCPD) insurance an optional coverage vehicle owners can choose to opt out of or keep in their policies.

Known as the OPCF 49 endorsement, or the “Agreement Not to Recover for Loss or Damage from an Automobile Collision”, the Financial Services Regulatory Authority (FSRA) – Ontario’s insurance regulator – announced the change on its website in December 2022, giving both private-passenger car insurance and commercial auto insurance policyholders the choice to opt out of DCPD coverage.

But should you opt out of DCPD coverage in your commercial auto insurance policy? And if you do, how does it affect your business vehicle’s coverage? Let’s take a closer look at what DCPD is, how it works, and how it may affect you if you elect not to include it in your policy:

DCPD commercial auto insurance is now optional

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What Is Direct Compensation-Property Damage (DCPD) Insurance?

DCPD insurance is designed to protect business vehicle owners from costs related to damage to their vehicles following a collision for which they are not at fault. It allows you to file a claim for damage and loss to your vehicle directly to your insurance provider.

DCPD helps ensure you are compensated quickly by your insurer to pay for repairs to your vehicle after being in an accident and covers damages to any fixed contents in the vehicle (such as the infotainment system built-in to the dashboard).

How Does Opting Out of DCPD Coverage Affect Your Commercial Auto Insurance Coverage?

The Ontario Government initiated this change in its 2022 budget to reduce the cost of commercial auto and private-passenger car insurance in the province. 

Therefore, opting out of DCPD coverage may help reduce your annual commercial auto insurance premium. However, by opting out of DCPD, if you are involved in a collision and are deemed not at fault, you cannot file a claim with your insurance provider to be reimbursed for vehicle repairs. 

In other words, you’re on your own to cover the cost of repairs to your vehicle following a collision.

If you’re thinking of opting out of DCPD coverage in your commercial auto or fleet vehicle insurance policy, we recommend you have a conversation with a Zensurance broker beforehand to ensure you understand what the risks are by opting out.

What Are the Mandatory Coverages in a Commercial Auto Insurance Policy in Ontario?

As of January 1, 2024, there are three mandatory coverages in a commercial auto insurance policy in Ontario. They are:

Third-party liability insurance coverage

Third-party liability commercial auto insurance covers the cost of injuries or deaths to other drivers and their passengers, and third-party property damage if you are at fault for a collision. You have options to increase your third-party liability insurance coverage limit.

Accident benefits coverage

If you suffer injuries following a car accident, accident benefits pay for your medical and rehabilitation expenses up to your coverage limit, whether you are at fault for the accident or not. You have options to increase your accident benefits coverage limit.

Uninsured automobile coverage

If you’re in an accident with an uninsured motorist or an unknown driver who commits a hit-and-run, uninsured auto insurance pays for damages to your vehicle, provided the incident occurred in Ontario and involves at least one other vehicle and driver.

What Optional Coverages Can You Add to a Commercial Auto Insurance Policy?

Now that DCPD insurance is optional in Ontario, it is one of many elective coverages you can include in commercial auto insurance to build a comprehensive policy.

We do not recommend opting out of DCPD coverage because signing the OPCF 49 endorsement also removes all-perils and collision or upset optional coverages from your policy. However, you can still include optional comprehensive coverage in your policy if you do opt out of DCPD protection. 

The other common optional coverages many business vehicle owners add to their policies include:

Collision or upset insurance

Collision or upset insurance covers repairs to your vehicle if it’s damaged or it is a total loss resulting from an accident with another vehicle for which you are at fault. If you don’t have collision coverage in your commercial auto policy, you alone are responsible for paying for damages to your vehicle resulting from the collision.

Comprehensive insurance

Comprehensive auto insurance covers damages to your vehicle because of specific named insurance perils (i.e. fire, theft, natural disaster, severe weather (such as a hailstorm that cracks your windshield or dents the car’s body), or vandalism). 

All-perils insurance

All-perils auto insurance is a combination of collision and comprehensive insurance coverages. It includes coverage of your business vehicle if it’s damaged after an employee or family member steals it.

Hired and non-owned commercial auto insurance

Hired and non-owned commercial auto insurance provides coverage for vehicles you hire, rent, or lease or for vehicles your employees own and use for work on your behalf.

Do You Need Commercial Auto Insurance for Business Vehicles?

Yes. Any business vehicle (cars, pickups, utility vans, SUVs) or vehicle used for business purposes should have a commercial auto insurance policy. 

Most private-passenger car insurance policies do not cover damage to or loss of a vehicle that’s used for commercial reasons, or if they do, the coverage limits may be insufficient to pay for damages if you’re involved in a collision.

Explore your options for commercial auto insurance by getting a free quote from Zensurance. Our knowledgeable team will shop our partner network of over 50 Canadian insurance providers to find the low-cost coverage you need and tailor it to suit your needs.

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About the Author: Yassin Elsayed

Yassin Elsayed is a Team Lead, Contractors at Zensurance.