DCPD & The New Alberta Auto Reform

What you need to know about DCPD coming January 1 2022.

DCPD & The New Alberta Auto Reform
By Christina Kelley

Here’s what you need to know about DCPD & The New Alberta Auto Reform. Changes are coming to the way claims for vehicle damage are settled in the province, and
Albertans who are not at-fault in a motor vehicle collision will soon be able to turn to their own
insurance companies for help rather than relying on a third party provider.
The new Alberta auto reform takes effect on January 1, 2022, and under the new legislation,
Direct Compensation for Property Damage (DCPD) replaces the existing property damage
portion of the third party liability coverage on your automobile insurance policy.

What is Direct Compensation for Property Damage (DCPD) Insurance?

DCPD is designed to enhance the consumer experience by improving the way insurance
companies are able to support their customers. DCPD is a part of the mandatory automobile
insurance and applies to all private passenger, recreational and commercial vehicles insured in
the province.
Under the new system, Albertans who are considered not at-fault in a motor vehicle accident
are able to seek compensation for damages to their vehicle and vehicle contents, as well as
coverage for loss of use or replacement transportation from their own insurance providers.
This reduces the need for subrogation (and other formalities) between insurers which means
claims will be handled in a more timely and efficient manner.

Beyond Advice: Not all not at-fault collision losses will be covered under DCPD Insurance. Examples
where this is the case include claims arising from a hit & run, collision with an uninsured vehicle, or
accidents involving two vehicles both owned by the same person. In each instance, damage to the
insured vehicle is only covered if Physical Damage (Collision and/or Comprehensive) coverages have been
purchased by the vehicle owner prior to the loss occurring.

What happens if I’m deemed at-fault or partially at-fault in a collision claim?

DCPD Insurance responds to the same extent a driver is found not at-fault in a motor vehicle
collision. This means that insurance providers will be required to cover 100% of the vehicle
damage claim for a driver who is deemed 100% not at-fault for the loss.
Where a driver is found to be at-fault for a collision loss, DCPD will respond to the portion of
the vehicle damage claim equal to the same percentage that driver is considered not at-fault,
and in these cases, optional Collision coverage is required to cover the remainder of the claim.

Take a look at the following claim example:

• Driver A and Driver B are both involved in the same motor vehicle collision causing
  damage to each of their vehicles.
• Driver A is found to be 25% at-fault for the loss and Driver B is deemed 75% at-fault.
• Driver A chose to purchase the optional collision coverage prior to the accident taking
  place. On the other hand, Driver B chose to decline the optional collision coverage.
• Since Drive A chose to purchase the optional collision coverage, DCPD Insurance will
  respond to cover 75% of the vehicle damage claim. The remainder of the claim (the
  portion equal to the 25% at-fault determination) will be covered under the optional
  collision coverage and subject to a collision deductible.
• For Driver B who chose to decline the optional collision coverage, DCPD will respond to
  cover 25% of his/her vehicle damage, and the remainder of the claim (equal to the
  percentage at-fault) will be paid out-of-pocket.

Following a collision, your claims adjuster will gather and review every detail of the accident
including police reports, witness statements and consultations with the examiner who assessed
the vehicle(s) for damage. After review, fault will be allocated based on these details and the
DCPD Fault Determination Rules.

How will the new system affect my automobile insurance premiums?

Under the new DCPD system, insurers are no longer responsible for paying for damage to
vehicles they don’t insure. This is the most significant change as it removes uncertainties and
allows insurers to deliver a more precise and accurate pricing model to the consumer with
premiums for DCPD coverage based on the costs associated with repairs to the specific vehicle
insured.

Stated simply, Albertans who own inexpensive vehicles will pay less for DCPD coverage than
those who own expensive vehicles with higher repair costs.

To discover how your vehicle compares to others on the road, check out the Insurance Bureau
of Canada’s annual publication: How Cars Measure Up 

Claims made under DCPD will have no adverse affect on premiums.

Beyond Advice: While insurance providers are required to provide DCPD coverage with a $0 deductible,
many insurers have chosen to implement deductible options which can be applied to lower premiums.
When considering deductible options for DCPD coverage, it’s important to keep in mind that the
legislation prevents the policy holder from recovering the deductible from an at-fault driver when a claim
has occurred.

Do I need to contact my agent before these changes take affect?

Albertans are not required to do anything before DCPD takes affect on January 1, 2022. The
legislative changes will be considered automatically written in to all existing Alberta automobile
insurance policies.

For consumers seeking more detailed information, visit:
Alberta Auto Insurance Reform
Direct Compensation for Property Damage
IBC

Be sure to reach out if you have any questions. We are your insurance industry partner and we keep on top of changes in the industry. 

Let us help you navigate these changes, we are experts in creating gap-free protection plans and are here to offer guidance in any phase of your decision-making process. 

Builder’s Risk Insurance

Understanding the Gap between your Personal or Commercial Property Policy &
Builder’s Risk Insurance.

Whether you are considering a major home renovation, planning to remodel your office space,
or building something new from the ground up, if you haven’t notified your insurance company
before the work begins, your time and the money you’ve invested likely aren’t covered. You
could be voiding the coverage on your existing residential or commercial property policy as
well.
Structures under construction pose an inherently greater risk to insurers than those that aren’t
because there is more opportunity for things to go wrong. This is true no matter the size and
scope of the work being done.

Accidental damage to exposed pipe or wiring can cause severe and often devastating fire or
water losses. Construction sites that are vacant or unoccupied are more attractive to thieves
and other criminals, and a labor shortage in the industry has companies desperate to fill new
positions as the industry continues to flourish with inexperienced or over-houred tradesman.
These are just a few examples of why insurers across the country have attached conditions to
the policies they offer that exclude coverage to any building under construction unless
permission is granted before work begins.

Beyond Advice: Permission granted doesn’t necessarily mean coverage granted. Your insurance
company may add an endorsement or special condition to your residential or commercial property policy
expressing consent for you to proceed with your renovation or construction project, but if you haven’t
discussed the coverage provided – and the exclusions that still apply – with your insurance provider, you
may find yourself inadequately covered should a loss occur.

“I’ve hired professional contractors. If something goes wrong, I’m protected by their
liability insurance.”

While that statement may be partially true (some of the time), it is important to remember that
the sole purpose of your contractor’s General Liability policy is to protect them. Not you.

The Commercial General Liability (CGL) policy is designed to respond in the event the policy
holder is sued for property damage or personal or bodily injury which is caused by the use of
their products, services, or the negligent actions of their employees. It provides the policy
holder with coverage for legal expenses, court-awarded damages and out-of-court settlements.

What does this mean for the property owner when a loss occurs?

A contractor’s liability insurance will only respond to loss or property damage if the contractor
is found liable or at-fault for the loss or damage that occurred, and often, when a claim arises,
liability is disputed by one or more of the parties involved.
When this happens, reaching a settlement can be both costly and time-consuming. For the
property owner who is ill-prepared and under-insured, this can mean project delays and for the
business owner, there is potential for lost revenues.

How does Builder’s Risk Insurance work to fill these gaps?

Also known as a Course of Construction policy (COC), Builder’s Risk Insurance is short-term,
project specific and tailored to meet the property owner’s coverage requirements in all areas of
the construction process.
From design to wrap-up, a Builder’s Risk policy offers protection against losses or damage
suffered at the construction site and to the building undergoing construction. It provides
coverage for both hard costs, such as labor, materials and equipment related to the project
insured, and soft costs such as professional or administrative fees, project management costs
and interest on money borrowed.
In the event liability is disputed, the Builder’s Risk policy will respond immediately, and claims
made against the policy should have little to no impact on the property owner’s claims rating
under their existing residential or commercial property policy.
Usually the responsibility of the property owner, Builder’s Risk Insurance is written with a
broader definition of who qualifies as a named insured, and is made available to any party with a financial interest in the project. While not an inclusive list, coverage may extend to the
general contractor, construction manager, sub-contractors, lender and building engineer.

Beyond Advice: Never assume the contractor you’ve hired has obtained Builder’s Risk Insurance for your
property on your behalf. If the contractor is required to obtain coverage as part of your written
agreement, make sure you receive proof of coverage prior to your project’s start date.
One final note for every property owner to consider – although placing coverage after
construction has started is not impossible, it can be more difficult. Often times, it’s also more
expensive.

If you have construction planned, or are simply entertaining the idea of a new project, it’s both
wise and recommended to speak with your insurance broker today!