The Alberta government announced another change to auto insurance in the province they say will help bring down premiums for drivers. This is on top of a change made in November 2024 allowing insurers to raise premiums by more than a previous 3.7% cap for vehicle owners with good driving records. That change came as the result of heavy lobbying on the part of insurance companies, who argued that caps actually lead to higher prices in the long term, primarily due to the instability created when insurance companies can’t earn profits sufficient to maintain capital investment. In addition, caps do not address the root causes of rising insurance rates, like fraud, excessive legal fees, and inefficient claims processing.
The most current change moves Alberta’s auto insurance to a predominantly no-fault model, which the government is calling “care first.” This is meant to address the issue of the soaring legal costs associated with auto accidents. Data from the General Insurance Statistical Agency shows that accident-related settlements in Alberta have surged by 116% over the past decade, resulting in Alberta drivers now paying more than three times as much in insurance premiums for legal fees and litigation costs as compared to drivers in other provinces. Between 2018 and 2022, the number of lawsuits following collisions increased by 48%, with over $1.2 billion spent on litigation. In cases that went to court, legal expenses often exceeded the compensation awarded for pain and suffering — sometimes by more than double. That has led to inevitable rate hikes.
What is ‘care-first?’
The care first model prioritizes medical supports for accident victims while limiting lawsuits against at-fault drivers. This system restricts legal action to cases where the at-fault driver is convicted under the Traffic Safety Act. The changes were introduced under Bill 47 — the Automobile Insurance Act, which still requires passing in the legislature. If passed, the bill will make Alberta the first province in Canada to adopt a privately delivered care-first insurance system.
“A care-first insurance system ensures that everyone injured in a traffic accident has access to medical rehabilitation, income support, and permanent impairment benefits, regardless of fault,” said Alberta’s finance minister Nate Horner.
The legislation will only apply to accidents occurring on or after January 2027, so Albertans may still have to wait to see the benefits, which are estimated to save Albertans up to $400 a year.
At-fault drivers would face higher insurance premiums, and in some cases, victims could still sue for pain and suffering if the driver was convicted of an offence under the Criminal Code or Traffic Safety Act. Situations when a driver may be convicted under the Criminal Code include impaired driving and dangerous driving. Traffic Safety Act offences include excessive speeding, distracted driving, failure to obey road signs, and reckless driving.
Certain offenders may be denied full benefits under the care-first system, such as those who deliberately cause accidents or who are convicted of serious offences. For example, someone involved in a collision while driving a stolen vehicle could be ineligible for full benefits.
Additionally, those who have to pay out-of-pocket expenses beyond their policy’s coverage retain the right to sue the at-fault driver for those costs.
Modelled after Manitoba
The Alberta government modelled the care-first system after existing programs in Canada, particularly Manitoba’s, which Horner described as offering “the highest level of benefits in the country.” However, Alberta plans to enhance those benefits to reflect the province’s higher wages. One change is income support. Manitoba caps theirs at $115,000, but in Alberta the cap will be $120,000.
Under the proposed system, all individuals injured in auto accidents — including at-fault drivers, cyclists, and pedestrians — would receive medical and rehabilitation benefits, covering medical care, rehabilitation, and daily living assistance.
The legislation will also establish the Alberta Automobile Care-first Tribunal, allowing Albertans to appeal insurer decisions, however those details are still being finalized.
Lower auto insurance rates from Lane’s
Are you struggling with high auto insurance rates? Insurance brokers such as us at Lane’s have access to the very best policies available from Canada’s most respected auto insurance providers. We do the shopping for you and know the right questions to ask to ensure you get the best deal available. We are a leading Alberta-based brokerage working out of Calgary, Banff, Edmonton and greater Alberta.
