It is very important to be properly informed about your coverage. Failing to purchase appropriate auto insurance can come with serious drawbacks.
On Jan. 1, 2022, Alberta implemented a direct compensation for property damage (DCPD) system for auto insurance, changing how claims are paid out in the province. This step was taken to help reduce insurance costs by removing several slow and expensive steps from the claims process.
The Insurance Bureau of Canada, the national industry association representing Canada’s private home, auto and business insurers, has recommended DCPD for its ability to reduce the red tape for customers by not having to demand payment from another company. Traditionally in Alberta, if a driver is not at fault for an accident, such as if you were rear-ended or someone hit your parked vehicle, the payment for repairs came from the at-fault driver’s insurance company. With DCPD, payment for damage now comes from your own insurer, rather than the other party’s. This allows payments to be made more quickly and with less hassle. Claim amounts cover the repairs to your vehicle and provide compensation for loss of use (such as the provision of a rental car) and damage to contents and belongings. Vehicle owners can also choose exactly which repair shop they want to take their car to for repairs, which was often a cause of disagreement for those having to deal with the usual claims process.
An important distinction between collision and comprehensive coverage
The Automobile Insurance Rate Board’s (AIRB) resources include a description of what DCPD means for drivers, and outlines the difference that DCPD means for holders of comprehensive insurance versus those who have both comprehensive plus collision insurance.
The minimum amount of auto insurance required in Alberta is liability coverage consisting of third-party liability and accident benefits (minimum of $200,000), medical payments ($50,000 per person), disability income (80 percent of lost wages), funeral expense benefits ($5,000), and death benefits (minimum $10,000). These coverages help pay for expenses should you cause damage do a property and/or harm a person, and are generally described as “comprehensive” by auto insurance companies.
Comprehensive coverage also includes repairs for damage caused to your vehicle by external incidences such as vandalism, flood, hail, theft, windshield damage and fire.
A very important distinction is that comprehensive insurance explicitly removes collision or “upset” from policies. Your own vehicle is not covered for repairs should you be in an accident, so you must be prepared to pay for repairs or replacement if you are at fault. Holders of both comprehensive and collision coverages are protected in the case of all kinds of collisions.
The fact that your own vehicle is not covered for collision makes a very big difference after a hit-and-run. Comprehensive insurance, also called PLPD (personal liability and property damage coverage), does not apply to uninsured vehicles or hit-and-runs.
- If you are found 100% not responsible (not at fault) for an accident, any vehicle repairs will be paid for by your DCPD coverage.
- If you have collision coverage, it will pay for damage to your vehicle even if you are 100% responsible (at fault) for the accident. It also covers the costs of towing, storage and salvage disposal. You will have to pay a deductible – the amount you have to pay toward repairs – before your insurance pays for the rest.
- While DCPD is meant to provide coverage in most instances where you are not at-fault in an accident, DCPD does not apply to all not-at-fault situations. For example, hit-and-runs are not covered under DCPD. Instead, an incident like this would be covered through the optional collision and comprehensive coverages on your policy.
Hit-and-runs and accidents caused by an uninsured driver may not be covered by those who hold comprehensive, or basic, coverage because there is no other driver to assign the claim to.
It is very important to check your policy for adequate coverage. In the event of a hit-and-run or accident caused by an uninsured driver, comprehensive plus collision insurance ensures you are fully protected.
Steps to take if hit by an uninsured or unknown driver
If you find yourself in the situation where you have been hit by an unknown or uninsured driver and there is no possibility of payment from your insurance company, as a last resort you can apply to Alberta’s Motor Vehicle Accident Claims Program (MVAC), which provides a way to sue for compensation.
Claims are eligible if:
- you suffered bodily injuries from a vehicle accident – property damage isn’t eligible
- you’re a resident of Alberta – if you live in another jurisdiction with a similar program, you may still be eligible
- the accident happened in Alberta
- the accident was the fault of an uninsured or unknown driver
- only the uninsured or unknown driver is at fault
Ensure you are properly covered with Lane’s
Lane’s Insurance employs experienced insurance brokers with decades of experience in the insurance business. We know exactly what questions to ask to ensure you get the right coverage for your needs and are clear and transparent about all the details of your policy. Simply put, we work for you, not the insurance companies. Contact us at our Calgary, Edmonton, Banff, or Alberta offices to see what we can do for you.
