All about the OPCF 49 Agreement in Ontario

6 minute read Published on Mar 22, 2024 by BrokerLink Communications

Two heavily damaged vehicles after collision on crash site.

Have you heard about the Ontario Policy Change Form (OPCF) 49 Agreement in Ontario? Don’t worry if you haven’t; it’s a fairly new car insurance endorsement that just came into effect on Jan. 1, 2024. The OPCF 49 Agreement plays a pivotal role in how your auto insurance operates in the event of an accident, especially when it involves underinsured motorists. If you’re ready to learn more about how this endorsement can affect your Ontario insurance premiums, keep reading as we unravel the layers of the OPCF 49 Agreement, providing a comprehensive understanding of its significance, workings, and impact on your auto insurance coverage.

What is Ontario’s OPCF 49 Agreement?

According to the Financial Services Regulatory Authority of Ontario (FSRA), the “Agreement Not to Recover Loss or Damage From an Automobile Collision (OPCF49) was created in collaboration with the industry. OPCF 49 gives consumers the choice to opt out of [mandatory] direct compensation-property damage (DCPD) coverage.” This endorsement (or policy add-on) is designed to allow customers to manage their own premiums and make their own decisions on insurance products tailored to their unique needs.

The introduction of this initiative was part of a broader strategy unveiled by the Ontario government in 2022 aimed at lowering auto insurance rates and offering motorists greater choice in their insurance options. This comprehensive plan also encompasses the increased implementation of usage-based insurance (UBI) and various other steps.

What is direct compensation-property damage (DCPD) coverage?

DCPD coverage is a mandatory feature in car insurance policies in Ontario, designed to simplify the claims process following a vehicular accident. It’s part of Ontario’s basic auto insurance policy, including mandatory third-party liability, uninsured motorist, and accident benefits coverage.

DCPD coverage specifically addresses damages to your vehicle and its contents when you’re not entirely at fault in an accident. What makes DCPD unique is its ‘direct compensation’ aspect, which means that in the event of an accident, you deal directly with your own insurance company, irrespective of who caused the accident. This direct approach streamlines the claims process, making it more efficient and less complicated for the insured.

Ontario’s insurance system operates on a ‘no-fault’ basis, meaning that each party’s insurance company covers their own client’s damages based on the degree of fault in the accident. So, if you’re found to be partially at fault, your DCPD coverage will cover the damages to your vehicle in proportion to the fault percentage attributed to you. It’s important to note that the coverage is subject to the limits of your policy, and it generally includes the cost of repairing or replacing your vehicle, along with the contents inside it.

However, there are specific scenarios where DCPD does not apply. For instance, if you are found to be entirely at fault for the accident, DCPD will not cover the damages to your vehicle - that’s where collision coverage comes in.

Is DCPD the same as collision coverage?

No, DCPD and collision coverage are not the same. Collision coverage is an optional policy add-on. It covers damage to your vehicle resulting from a collision where you are at fault or in situations where the fault isn’t clear, such as hitting an object or rolling over. It’s designed to cover the cost of repairing or replacing your vehicle after such incidents.

Is DCPD the same as comprehensive coverage?

No, it’s not the same as comprehensive coverage. Comprehensive coverage is another optional type of auto insurance add-on offering a more extensive range of protection. It encompasses various non-collision events, such as theft, vandalism, fire, natural disasters (e.g., hail, flood, earthquake), falling objects, and collisions with animals (e.g., hitting a deer).

Why might someone choose to skip DC-PD coverage?

This decision ultimately revolves around the desire for greater control over their insurance choices and the potential to alleviate the burden of high premium payments. Here’s why some drivers may be tempted to skip it:

To lower their own premiums

The most immediate benefit of opting out of DC-PD coverage is reducing insurance premiums. Since this coverage is part of the standard auto insurance package, removing it helps keep their auto insurance rates low by decreasing the overall policy cost. However, how much it may be lower will depend heavily on the insurance provider and the current market.

They own an older or low-value vehicle

Owners of older cars or vehicles with minimal value might decide that the cost of DC-PD coverage isn’t justified. If they own one or multiple vehicles that aren’t worth much, the owner may feel that potential damage costs wouldn’t significantly impact them financially, making the insurance for such events less necessary.

They’re willing to risk it

Some drivers might assess their risk of being in a not-at-fault accident as low, especially if they have a strong driving record, drive infrequently, or in areas with low traffic. They figure the risk of being in a not-at-fault collision is low, so why pay for protection they might not need?

They need the extra cash

Let’s face it: times can get tricky, and when budgets are tight, every penny counts. For people prioritizing other financial needs, cutting down on insurance expenses, even temporarily, can provide some much-needed relief.

Keep in mind that skipping DCPD is a bit of a gamble. Without it, you’re on the hook for all repair or replacement costs if you’re in a not-at-fault accident. It’s a classic case of balancing immediate savings against potential future costs. So, if you’re thinking of going down this road, it’s wise to consider: Are the short-term savings worth the possible long-term risks? It’s all about striking the right balance for your wallet and peace of mind.

What to expect from the Ontario DCPD insurance change in 2024

Essentially, by signing the form and agreeing to OSCF 49, you’re saying goodbye to claiming DCPD and collision or upset coverage for your vehicle. But let’s break down what this really means.

Imagine this scenario: your car gets damaged in a collision. Even if it’s not your fault, don’t expect any compensation for the loss. This rule applies across the board – you won’t get a dime from your insurance policy, the person who caused the damage, or their insurance company.

Remember, under OPCF 49, you’re also agreeing not to seek any compensation from other parties involved in the accident. Yes, that includes the driver, who might actually be personally responsible for the collision.

And let’s not forget: say you’re cruising around in a car that’s not fully paid off or is leased, and bam! – you’re in a no-fault accident. Without OPCF 49, guess what? You’re still on the hook to pay off your car to the dealership. The OPCF 49 Agreement form even gives a heads-up to check with your lease or financing company before you sign off on this.

What do you miss out on?

So, what are you missing out on? Well, a lot. You won’t receive any claim reimbursement for repair costs. If your car’s a total write-off, you won’t get its value back. And those days when your car’s in the shop, and you’re left without wheels? No compensation for that, and nowadays, don’t expect a relatively quick repair job, either. Need a rental vehicle? You’ll have to handle car rental fees on your own. And let’s not forget about the contents of your car – any damage or loss there won’t be covered either.

Nevertheless, if you decide to step away from DCPD coverage, just remember that it doesn’t have to be forever. You always have the option to reinstate it in your insurance policy. But here’s the catch—when you choose to reinstate it, you’ll need to catch up on the premium difference. Think of it as the cost of changing your mind.

Final thoughts

In a nutshell, Ontario’s OPCF 49 Agreement lets you skip DCPD coverage in your car insurance, potentially reducing your premiums. But be cautious – if you do, you’ll have to foot the bill for repairs in not-at-fault accidents and won’t get compensation for things like rental cars or lost items in your vehicle. You can change your mind later, but it’ll cost you more in premiums.

Voluntarily opting out of DCPD coverage is a significant choice with impactful consequences, so be sure to think it over and make sure you’re fully informed before making this decision. If you think this might be the right choice for you, consider speaking with a licenced insurance broker before making any sudden decisions. They can help you understand how it may affect your insurance and even help you find the best car insurance quotes from top insurance companies in your area.