Expert says new Ontario insurance rules could save drivers up to 20% on payments. But is it worth it?

Ontario drivers pay some of the highest insurance premiums in Canada and starting in the New Year, there may be a way to save some money, but some experts are warning against it.

As of January, drivers will be allowed to “opt out" of direct compensation property damage (DCPD), which protects car owners from costs related to vehicle damage from collisions if they are not at fault. If you don’t have DCPD coverage and you get into a collision, you must repair your own vehicle, you can’t sue if a driver hits you or have items replaced in your vehicle damaged in a crash.

“In some cases, you could save five or ten or even twenty per cent," Daniel Ivans, insurance expert with Ratesdotca, told CTV News Toronto. "It really depends on the vehicle you are driving and the company you are insured with."

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According to Anne Marie Thomas with the Insurance Bureau of Canada, drivers should weigh their decision carefully before agreeing to decline DCPD coverage.

“This coverage provides you with a lot more protection than just damage to your vehicle,” Thomas said, adding “it's about weighing your position and your level of risk and your comfort with that."

You may consider dropping DCPD coverage if you have an older car that’s not worth very much, but even then, Thomas said it might not be worth the risk.

In addition for being on the hook for repairs, drivers with DCPD coverage in a collision will also have to pay costs normally be covered by insurance such as for the tow truck, vehicle storage or rental cars.

The provincial government says the change is meant to increase consumer choice and could be useful for drivers of older cars. 

“This is an important change the government is making to give drivers more options,” a spokesperson for the Ministry of Finance said in a statement to CTV News last month.

According to a May report by Ratesdotca, insurance premiums in Ontario have risen about 12 per cent in 2023 compared to 2021, averaging at about $1,766.

Premiums are particularly high in the GTA, with costs surpassing $2,000 in Vaughan, Richmond Hill, Mississauga, Toronto and Brampton.

MPP Tom Rakocevic, the Ontario NDP’s auto insurance critic, told CTV News Toronto Monday that if the province really wanted to reduce drivers’ bills, they would cap insurance rates.

“The regulator needs to step up and cap the amount of profits that they're making off the backseat of drivers, who were being gouged and are paying the highest rates of anyone,” he said, stressing the answer is not to lower coverage for residents.

“Governments just simply don't want to take on these insurance companies who are raking in record profits.”

The change is part of a wider multi-year strategy first announced in 2019, which, at the time, included electric proof of insurance, improvements in rate regulation, and enabling insurance companies to offer more discounts and options.

DCPD coverage is typically one part of a basic auto insurance policy, along with third-party liability, statutory accident benefits, and uninsured automobile coverage.

With files from CTV News Toronto's Katherine DeClerq.