In December the Financial Services Regulatory Authority of Ontario (FSRAO) announced that the Ontario Policy Change Form (OPCF) 49 would henceforth allow drivers to opt out of Direct Compensation-Property Damage (DC-PD) coverage.
Big deal, you are probably saying reading this, not having a clue, as was the case with myself when I came upon it on an insurance and driving website, as to what this actually means when it comes to insurance coverage.
What it means, I found out as I went through the actual document, is about as stupid as it can get.
You can get your insurance cheaper, all right, but to do so you have to sign a form saying you won’t use it in the event you have an accident. That is what the form says in its formal name, Agreement Not to Recover for Loss or Damage from an Automobile Collision, and also in its introduction:
WARNING – By signing this form, you agree you cannot claim Direct Compensation Property Damage and Collision or Upset Coverage.
“If the described vehicle is damaged in a collision the loss will not be compensated even if you are not at fault,” the body of the agreement says. “You will not be compensated by this insurance policy, or by anyone else, including anyone at fault for causing the damage, or their insurance company.
“Not being compensated means you will not be reimbursed for any loss or damage to the described automobile including: repair costs; the value of the vehicle; the loss of use of the vehicle; a replacement for the vehicle; or loss or damage to any of the vehicle’s contents.”
This, my wife Barbara suggested as we discussed the new policy, would be like enrolling your child in daycare and then signing a piece of paper that says your rate will be reduced if you don’t bring the kid.
Actually, I am having a hard time digesting the fact that the regulatory authority would come up with something like this.
And why would anyone sign up for it?
The only instance where I could see giving up such coverage to save a few bucks would be if the vehicle being driven was so old and beat-up that it essentially no longer had any intrinsic value.
But even then, a person would now be without the vehicle that until that point had taken him or her from place to place, with no possibility of replacement.
The people who brought this forward see that as progress? Really?
And would the savings really be that much? Daniel Ivans, a RATESDOTCA insurance expert, was quoted by senior editor Jessica Wei of the organization as saying if drivers opted out of “direct compensation” coverage, they could potentially save only five to 10 percent of their total annual premium.”
Those amounts would be insignificant in the way of savings when you consider how great the loss would be if the vehicle was relatively new and pricey.
Wei said according to the provincial announcement, OPCF 49 was introduced as a measure to “enable innovation and choice.”
It was announced as part of a larger plan set out by the Ontario government in 2022 to reduce auto insurance rates and provide drivers with more flexibility in their insurance coverage, which also includes wider adoption of usage-based insurance (UBI) and other measures.
So it is not a joke. It just seems like one.
Ivans told Wei that “in general, opting out of this (insurance) coverage would not be advisable.”
At last some common sense.
He said while signing away DC-PD coverage might be tempting for cash-strapped Canadians who consider their premiums already too high, the loss of the vehicle will likely present a bigger burden. And it can also impact someone in many different and expensive ways.
“For example,” he said, “if a driver of a leased or financed car opts out of OPCF 49 and gets into an accident in which they are not at fault, they would still have to pay their dealership back the remainder of the price of their car. (In fact, the form explicitly mentions that they should consult their financing company before signing). Lengthened vehicle repair times could also significantly extend the loss of use of a car.
“Meanwhile, car rental fees have also gone up. Last August, CBC reported rental prices of over $2,000 a month for a basic sedan, and short-term fees of over $120 per day, with no foreseeable relief anytime soon.”
So Ivans says for those reasons and others (namely, peace of mind), it’s best to keep your DC-PD coverage where it is — especially if money is tight.
“As a general rule of thumb, if a client is declining a coverage due to affordability, they probably can’t afford not to have the coverage.”
As the 49 in OPCF49 would indicate, there have been 48 previous policy changes in regard to insurance, none of them as clueless as this one.
A person can switch back to regular insurance coverage at any time by expressing a desire to do so and anteing up the required increase in rates, but I am suggesting here that no one get involved in this scenario in the first place.
The reward a person would get in regard to a lower rate is not worth the risk involved, the possible loss of a vehicle with no chance of recovery.
If you don’t like what you are paying, shop around. You may not do much better but whatever it is, it will be far better than signing away your rights to reimbursement in the event you have an accident.