Registered Insurance Brokers of Ontario (RIBO) Practice Exam

Direct Compensation for Property Damage (DCPD) is best described as a no-fault coverage for vehicle damage. In a DCPD system, each party involved in an automobile accident claims directly from their own insurance company for damages to their vehicle, regardless of who is at fault. This simplifies the claims process and reduces disputes over fault, which can often complicate and prolong the settlement of claims.

DCPD is designed to cover the costs of repairing or replacing your own vehicle without the need to establish liability or prove fault in the incident. This is particularly beneficial for the insured, as it ensures faster access to repairs and helps to avoid the potential delays that can arise when determining fault in an accident.

Other options do not accurately capture the fundamental concept of DCPD. While identifying fault in accidents is important in general insurance contexts, DCPD specifically operates on a no-fault basis, making that approach ineffective in this context. Liability coverage, on the other hand, pertains to damages for which you are responsible to third parties, and is thus not representative of DCPD’s focus. Lastly, though DCPD applies primarily to personal vehicles, it is not exclusively for just personal vehicle situations as it can encompass certain commercial scenarios as well.