On January 1st, amendments to the insurance act came into effect and changed the way we deal with automobile collisions. Alberta now follows the direct compensation for property damage model, or DCPD.
Change #1: Who Pays for What?
Direct compensation for property damage means that drivers who are not at fault in a collision will need to go through their own insurance provider to have the damage to their vehicles assessed and repaired.
However, that doesn’t mean at-fault drivers will get away clean. They will still be accountable, and will face the same impact on their driving record as before.
Change #2: What Will It Cost You?
Now we’re getting to it, the reason you’re here. Is your premium going to change? The short answer is “It depends.” Whether your premium will go up or down depends entirely on the value of your vehicle. Let’s break it down:
- Under the old model, your insurance premium was calculated to include the cost of crashing into someone’s luxury car. Think rear-ending a Lamborghini at a stop light; unlikely, but it could happen, and your insurance provider had to take that risk into account when building your policy.
- DCPD premiums will be based entirely on the value of your vehicle. If you drive an expensive car that is expensive to fix, your premiums could see a jump. If you drive a less expensive vehicle, you may have to pay less.
While opinions and estimates vary, somewhere between 70 and 80 percent of drivers will see a change in their premiums, with about half seeing reductions and the other half seeing increases.
Change #3: Are There Any Real Benefits?
Absolutely. Instead of chasing around the insurance provider of the at-fault driver, you will deal directly with your insurance provider to get your car fixed. That means you’ll get your money faster and won’t have to deal with an insurance provider trying to give you the least amount possible for the damage to your vehicle.
It could be said that this is a more fair system, because the cost of premiums is directly related to the cost of the vehicle you are driving, not the chance that you could be at-fault in an accident with a luxury car. Alberta had been the only province that did not subscribe to the DCPD model, and it was just a matter of time before we hopped on the bandwagon.
