My brother-in-law works in insurance. At a family dinner we jokingly complained about insurance rates when he said Ontario was going to make auto insurance cheaper by allowing people to opt out of coverage that would compensate them for damage to their own car even if someone else knocks them over. He didn’t know much more. Is it true? Would that mean I wouldn’t be covered if someone wrecked my car? Could I sue them? It certainly doesn’t seem worth it. – Tim, Kitchener, Ont.
An upcoming option on Ontario auto insurance policies to deny coverage for damage to your vehicle when you’re not at fault could save you a few dollars a month, but it could cost you tens of thousands dollars if someone hits you, an insurance broker said.
“If you have an accident that you are not responsible for, you cover your own vehicle and you cannot sue the driver,” said Morgan Roberts, director of RH Insurance, a Toronto-based online insurance broker. “So if someone hits you from behind, something you can’t control, the insurance won’t cover the loss at all. You would have to arrange and pay for your own repairs and rental vehicle.
The provincial government recently amended the Insurance Act to allow policyholders to sign a form refusing to recover damage to their vehicle in the event of an accident. The idea, according to the government, was to give consumers “more choice” and potentially reduce their monthly car insurance premiums. When the change takes effect on January 1, 2024, signing Ontario Policy Change Form 49 will allow you to opt out of Direct Compensation Property Damage (DCPD) coverage, also known as without fail.
Currently, all policies sold in Ontario must include DCPD, which covers your car if you are not at fault.
If someone hits you now, you can go to your own insurance company and they will either pay to repair the damage, or replace your car, or give you a payment based on the current value of the car, whether you can then use for another vehicle.
Coverage for damage to your car if you are at fault in a collision is not automatically included in policies. It is an additional option that you must purchase.
If you sign OPCF 49 to save money on insurance, it would remove that no-fault insurance coverage from your car – and you couldn’t sue the driver or owner of the other vehicle.
Your insurance policy would still include accident benefits coverage, if you were injured, and third party liability coverage of at least $200,000, which protects you from lawsuits if you cause an accident and someone is injured or killed or their property is damaged.
The form – titled “Automobile Collision Loss or Damage Non-Reimbursement Agreement” – contains a detailed warning:
“If the vehicle described is damaged in a collision, the loss will not be covered even if you are not at fault. You will not be covered by this insurance policy, or by anyone, including anyone liable of the damage, or his insurance company.
“Not being compensated means that you will not be reimbursed for any loss or damage to the described automobile, including:
• repair costs
• the value of the vehicle
• loss of use of the vehicle
• a replacement for the vehicle
• loss or damage to any of the contents of the vehicle
“If you are leasing or financing the vehicle, you should not sign this form without consulting the leasing or financing company, as you may be personally liable for its loss or damage.”
Roberts said it means exactly what it says: if someone hits you and they’re at fault, you’re on your own.
For example, if you signed the form and your $30,000 SUV was totaled in an accident, you wouldn’t get any money for it.
“It’s something you need [willingly agree to] sign up and I would highly recommend talking to your broker or agent about it, just so you know what will happen if you have an accident,” Roberts said. “It’s a lot to refuse if you don’t know what you’re refusing.”
The insurance industry for this?
The Insurance Bureau of Canada (IBC), an industry association for insurance companies, said OPCF 49 gives consumers “choice.”
“IBC is supporting an Ontario auto insurance product that allows customers to manage their own premiums and choose insurance products tailored to their unique needs,” said Anne Marie Thomas, Director of Consumer Relations and IBC Industry, in an emailed statement.
Ontario will be the only province that lets you choose not to be covered if someone hits you, she said.
Offering this option may be attractive to insurance companies because “it would definitely save them paying,” Roberts said.
In a LinkedIn post, John Baizana, an Ottawa insurance broker, said consumers don’t want choice — they want lower premiums.
“In all my years in the insurance industry, I’ve never heard a customer say, ‘I wish I didn’t have insurance coverage for my car when someone else hit my car. car,'” he said. “So instead of tackling real issues like fraud, waste, and system inefficiencies, consumers have ‘more choice’.”
Currently, you can save on insurance by declining optional coverages, including collision and comprehensive.
Collision insurance covers the cost of repairing your vehicle if you are at fault. If you hit someone and you don’t have collision insurance, you are responsible for the repairs.
Comprehensive insurance, on the other hand, covers almost anything that is not the result of a collision, including theft, vandalism, hail and flying objects.
Is the risk worth it?
How much could you save if you waive accident coverage if someone hits you? It will depend on the value of your car, your driving record and where you live, Roberts said.
“I made a quote for me [and] my policy would cost about $350 less per year,” Roberts said. “Depending on what you pay, the savings could be significant.”
Opting out of coverage might make sense for drivers of old vehicles that aren’t worth much, she said.
“I think some people will benefit from it,” she said.
But Baizana fears this will leave low-income drivers responsible for repairs they cannot afford simply because they “need every possible savings on their insurance premiums”.
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