• Wed. Dec 6th, 2023

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New option in Ontario car insurance will have terrible repercussions

Signing OPCF 49 you’re on the hook to lenders if someone else hits your vehicle

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Ontario’s provincial government says it will find ways to save you money on ever-increasing car insurance premiums. The latest solution on offer is, instead, a steaming pile of predatory nonsense. Effective January 2024, OPCF 49 would allow drivers to opt out of coverage to repair their damaged vehicle, even if they’re involved in a crash that isn’t their fault

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It is being touted as a way to give you more options when insuring your car. This is a solution a government offers when they’re offering you nothing at all, or worse yet, offering you something they know has the potential to end very badly. 

OPCF 49 is an agreement you can sign to lower your insurance premiums — what the Ontario government is calling ‘more choice’. This ‘choice’ is so bad, this is the wording in the document. Italics are mine: 

“WARNING (doesn’t this usually accompany live wires overhead or bungee jumping?) — By signing this form, you agree you cannot claim Direct Compensation Property Damage and Collision or Upset Coverage: If the described vehicle is damaged in a collision the loss will not be compensated even if you are not at fault. (You get bashed, you walk home. You walk to work because now you have no car.) You will not be compensated by this insurance policy, or by anyone else, including anyone at fault for causing the damage, or their insurance company. (Don’t bother coming crying to us. We told you) Not being compensated means you will not be reimbursed for any loss or damage to the described automobile including: • repair costs; • the value of the vehicle; • the loss of use of the vehicle; • a replacement for the vehicle; or • loss or damage to any of the vehicle’s contents. (Even if it wasn’t your fault. At all.) 

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“If you lease or finance the vehicle you should not sign this form without consulting with the lease or financing company because you may be personally responsible for its loss or damage. (Give this a think: in a world of 108-month — and more — car loans, you might still owe money on this car that no longer works and you’re not getting a dime for, even if someone else hits you. Forget ‘should’: do not sign this, and those places are changing their wordings as I write this.)

“EXAMPLE (in case we haven’t scared you enough with our tortured description of what you’re not getting): Another vehicle hits your vehicle from behind. Your vehicle is damaged requiring repair, and you need a replacement vehicle while repairs are done. Even though you are not at fault, your insurance will not cover this or help you with the loss. You must arrange for your repairs and rental vehicle, all at your own effort and expense. You cannot claim reimbursement from the driver or owner of the vehicle that hit your vehicle or from their insurer. (So you’re hoping your sibling can weld your car back together and now you have to ask Mom if you can use her car for a few weeks. She’s gonna say no.)

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Morgan Roberts is the Director of RH Insurance at Ratehub. She says brokers and agents will be able to offer this product to customers trying to reduce their insurance premiums, but she cautions the very people who might be tempted by it are those who can least afford it. For example, if I signed this OCPF 49, it might save me about $300 annually. That’s nowhere close to enough to consider losing my vehicle with no compensation even if I’m not at fault, but it is a not-insignificant portion of my premium. But when Roberts runs the numbers for a fictitious male, early 20s with a newish truck, the amount he could save jumps to over $1,700. Those most impacted by sky-high insurance rates are also at the highest risk of considering this ‘choice’. Roberts says education pieces that go out to the industry will have to be concise and strenuous to make sure those they have considering signing it are aware they are essentially signing away any recompense for their lost property, even if they’re not at fault.

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John Baizana, an insurance brokerage executive is more pointed. “Consumers are not writing their MPPs or marching on Queens Park demanding ‘more choice’. They want lower auto insurance premiums. The introduction of this ‘choice’ does not address, and only distracts from, the real issues of fraud, waste, and inefficiencies in the system. However, it provides a podium for politicians and industry lobbyists to boast,” he says. As he was quoted in Canadian Underwriter, “In all my years in the insurance industry, I have never had a client say — “I wish I had no insurance coverage for my car when someone else hits my car.”

Most of us are familiar with the concept of removing collision coverage from older vehicles, acknowledging that we’re willing to live with dents and bumps — or even writing off — a car not worth putting much money into. The language surrounding OPCF 49 slithers dangerously close to this more familiar one, but if you remove collision from your jalopy and someone else hits you, you still get to have it repaired. Removing collision coverage says if you screw up, it’s on you. OPCF 49 says if anyone screws up, you’re on your own. The only way OPCF 49 makes sense is if you can replace your vehicle for the amount you might save. 

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Aftermath of the speeding Mazda3
Aftermath of the speeding Mazda3 Photo by Alan Barilla /Facebook

This is not how to lower insurance premiums for consumers. This is a weasel’s den of terrible outcomes that lure the most vulnerable — people with limited money and high premiums — into a predatory trap. Brokers and agents will need to be ruthless in laying out the consequences, and consumers have to listen. Some of the very people who will be tempted to opt out of this coverage are going to get swept into untenable situations. 

When contacted for comment, the Insurance Bureau of Canada (IBC) says it supports this product: “IBC believes…OPCF 49…provides consumers with the ability to tailor their insurance coverage to their needs.” I do not agree with this first statement; I do agree with the next one: “Prior to making this election, insureds should consult with their insurance representatives to fully understand the full implications of their decisions.” 

Offering OPCF 49 is not how you fix a broken insurance system. 

Lorraine Sommerfeld picture

Lorraine Sommerfeld

Sommerfeld has been polishing her skills as an advocate for over 16 years, helping decipher a complicated industry for consumers who just need good information. A two-time AJAC Journalist of the Year, ask her anything – except to do a car review.


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