Direct Compensation Property Damage extends to the content of the vehicle

A consumer was rear-ended while transporting an expensive bicycle on a vehicle-mounted bike rack. A claim was submitted, and the insurer promptly addressed the damage to the vehicle without issue. However, both the bicycle and the bike rack sustained significant damage in the collision.

New Brunswick operates under a direct compensation program, whereby insurers are responsible for handling their own insured losses, regardless of fault, provided the appropriate coverages are in place. At fault losses are processed under the collision coverage and the not at fault claims are handled under Direct Compensation Property Damage (DCPD). As a result, insured individuals have no legal recourse against an at-fault third party for damage to their vehicle or to property being transported by that vehicle.

In this case, the insurer declined coverage for the damaged bicycle and rack, advising the consumer to submit a claim under his homeowner’s insurance policy instead. The consumer considered this approach unfair, as it would require him to file claims under two separate insurance policies arising from the same incident.

His concerns were justified. After the consumer contacted our office, we contacted the insurer and raised the issue. Upon review, the insurer promptly acknowledged the error, reversed its position, and agreed to indemnify the consumer for the damage to the bicycle and bike rack under the Direct Compensation Property Damage (DCPD) provisions of his automobile insurance policy.