Canada: DCPD Coverage Is Introduced To Alberta's Standard Auto Policy

I. Introduction

The Alberta Government has introduced changes to the Standard Owner's Automobile Insurance Policy ("SPF-1"), effective January 1, 2022.  The amendments incorporate language that is more consistent with other sections in the SPF-1, as well as the other Standard Policy Forms. More specifically, most changes focus on the upcoming advent of Direct Compensation for Property Damage ("DCPD") coverage in Alberta.

The changes to the SPF-1 follow the making of the Direct Compensation for Property Damage Regulation, Alta Reg 132/2021("DCPDR"), and the Miscellaneous Insurance Provisions Amendment Regulation, OC 181/2021, both of which will come into force on January 1, 2022, alongside section 585.1 of the Insurance Act, RSA 2000, c I-3(the "Act"), which was recently introduced in Bill 41. The DCPDR sets out in great detail how insurer's must determine the degree of fault of the insured for the loss of use or damage described in section 585.1 of the Act, which will form the equivalent of the Driver's Fault Chart used in Quebec and the Fault Determination Rules used in New Brunswick, Nova Scotia, Ontario and Prince Edward Island. The DCPDR also provides particulars relating to voluntary payments, prescribed classes of contracts and permitted indemnification.

II. Section A.1

Section A.1 was added to the SPF-1 to address the potential application of DCPD coverage. DCPD coverage allows insured drivers to be compensated by their own insurer for property damage resulting from an automobile collision, to the extent they were not at fault in the accident. Similar to Ontario, the new Section A.1 expressly confirms that insured's are not permitted to sue anyone, including an at-fault motorist, to recover their DCPD deductible.

Under Schedule C, to clarify the interaction between DCPD coverage and Section C deductibles, the SPF-1 now states:

The express exclusions of Section C coverage have been expanded to include instances where an insured drives or operates the automobile while in a condition for which the insured is convicted of an offence under section 130 of the National Defence Act, RSC 1985, c N-5, or contravenes section 88.1(1) of the Traffic Safety Act, RSA 2000, c T-6. This amendment reflects the Alberta Superintendent of Insurance's determination that these instances are equivalent to Criminal Code, RSC 1985, c C-46, impaired convictions.

The definition of "the automobile" has been expanded for the purposes of Section A.1 to include personal utility trailers with a gross vehicle weight rating of 910 kilograms or less, that are not used for temporary or permanent accommodations. The intention of the drafters was to include personal utility trailers that, in accordance with Alberta Transportation, do not require trailer brakes. Additionally, any trailer would be included in the definition if it is described in a Policy or Certificate of Automobile Insurance that provides for DCPD coverage. Section 6 of the General Provisions has been amended to clarify that separate deductibles will apply to a trailer and automobile under Section A.1 coverage if the trailer is specifically listed with an applicable deductible.

III. General Amendments

The amendments have removed outdated language, including reference to "the application", which has been replaced with more specific reference to the Policy and the Certificate of Automobile Insurance (the "Certificate"). The Certificate is referenced separately as it is not part of the Policy, but rather a representation of the Policy. References to the particular policy contract have also been amended for consistency by capitalizing "Policy".

Where indemnity is provided under subsections 1, 3 or 4 of Section C, following a theft of the entire automobile, the maximum reimbursement for the rental of a substitute automobile was previously capped at $750.00 and the recent amendments increase this cap to $900.00, which adjustment was made to reflect inflation.

IV. Conclusion

As the amendments to the SPF-1 are primarily aimed at addressing the introduction of DCPD coverage in Alberta, much of their impact will rely upon the interpretation and application of the DCPDR and section 585.1 of the Act, which both come into force on January 1, 2022. This is expected to be a developing area, possibly following those other provinces who have previously introduced DCPD coverage.

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