PEI’s New Direct Compensation for Property Damage (DCPD) Regime Effective October 1, 2015: 5 Insurer FAQs
October 21, 2015
By Alexandra Dalton, Articled Clerk at McInnes Cooper,
D. Shannon Farrell, Partner at McInnes Cooper
Effective October 1, 2015, PEI joined several other Provinces, including NB and NS, and adopted a new Direct Compensation for Property Damage (DCPD) regime. The new regime will change how insurers compensate their insureds for property damage incurred in automobile accidents for which the insured is not at fault and should reduce litigation with third party insurers over what are often relatively modest property loss claims.
Here are the answers to five frequently-asked insurer questions about PEI’s new Direct Compensation for Property Damage (DCPD) regime.
- What’s different under the DCPD Regime? Under the prior regime, if an insured were in an automobile accident, the other party’s insurer paid for the portion of the damage to the insured’s vehicle’s for which the insured was not at-fault; if the insured had collision coverage, its own insurer paid for the portion of the insured’s vehicle damage for which she was at-fault. In contrast, under the new DCPD regime, te insured driver is compensated by her own insurer for property damage resulting from an automobile collision for which the insured was not at-fault.
- Does DCPD always apply? No. DCPD only applies when:
- Jurisdiction. an automobile collision occurs in a jurisdiction where DCPD coverage is mandatory (PEI, NS, NB, Ontario and Quebec);
- Licensed. Both insurance companies insuring the involved motor vehicles are licensed in that DCPD jurisdiction; and
- Fault. Damages resulting from the automobile collision were at least partially caused by another party (if one driver is 100% at-fault, the damage is covered under that driver’s “collision coverage”).
- How is financial compensation determined under DCPD? The financial compensation is based on the insured’s degree of fault, determined by fault determination Rules prescribed by regulation, and governed by these stipulations:
- Does DCPD affect a person’s ability to sue for personal injury?
No; those rights are maintained under the existing tort system
- How will DCPD affect PEI insurers? The principle – and most immediate – advantage of DCPD legislation to PEI insurers should be a reduction in litigation with third party insurers over what are often relatively modest property loss claims. On balance, with each insurer paying its own insureds’ property loss claims, the total number of property damage claims being paid out may be relatively unaffected. The ease with which insurers will be able to apply the new fault determination Rules remains to be determined, but presumably, it will be a faster process and may require less administrative resources than the former approach of negotiating – and potentially litigating – with a third party insurer. Theoretically, there is some new exposure to litigation based on the ability of individual insureds’ to challenge determinations of fault made under the Rules. Practically, however, this has not been a significant issue in other jurisdictions, such as NB, where DCPD legislation has been in effect for some time.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Insurance Defence Team to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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