Relief for car insurance is coming

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Drivers will save an average of $400 per year, and they will see these savings beginning in January 2027.

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Absolutely nothing. You will purchase insurance from brokers exactly like you have in the past. Then you contact your insurance company if you get into a collision just like before.

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When a driver is injured in a collision, they will make a claim like they always have, and be compensated directly by their insurance company. This will give Albertans quicker access to care without worrying about a lengthy process.

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After hearing from over 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system to reduce costs and increase benefits. Alberta’s government held an auto insurance summit in spring 2024 that engaged with all industry stakeholders, including insurance companies, brokers, and the legal community. Feedback from the summit as well as follow-up consultations with these groups was incorporated into the reforms.

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In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs increasing vehicle damage repair costs, and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

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Alberta’s government estimates the new system to be fully implemented by January 2027.

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Alberta’s government commissioned two auto insurance reports, which showed that legal fees, and litigation costs tied to the province’s current system significantly increase premiums. A 2023 report by MNP shows a 48 percent increase in collision-related lawsuits between 2018 and 2022, with litigation costs exceeding $1.2 billion.

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Yes. Injured Albertans will still be able to sue an at-fault driver convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act. They will also be able to sue for out-of-pocket expenses that go beyond their insurance coverage.

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Injury claims under Care-First will be distributed in a matter of weeks for most cases. Depending on the extent, serious and catastrophic injuries may take longer. This is compared to several years for claims that enter litigation in the current system.

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No, high-risk drivers will continue to pay higher premiums.

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In developing a Care-First system, we worked closely with stakeholders, including insurance companies, insurance professionals, Alberta insurance regulators, and health care practitioners, to ensure a smooth transition. Government, is working with the Automobile Insurance Rate Board, to develop and rollout a public campaign to educate Albertans regarding the Care-First model.

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We believe that Albertans value the ability to select an insurer of their choice and that a one-size-approach does not work for all. This helps to promote a competitive market. In addition, an economic analysis commissioned by the government of Alberta this spring, indicated a public insurer could cost Alberta taxpayers nearly $3 billion to establish. A public insurer would cost millions to operate annually.

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Insurers have clearly stated they may exit the market if substantial reform to the system is not implemented. Transitioning to a privately delivered, Care-First model is the best option for keeping insurers in the Alberta market and ensuring affordability and accessibility of auto insurance for Albertans.

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Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving.

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The first phase of work on this new auto insurance system is now complete on the government’s side, but auto insurance companies and government need time to create and implement the new system for approximately 3.4 million policies.

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The Care-First system focuses on achieving the best possible health recovery outcomes for injured persons following a collision. All injured persons, including at-fault drivers, are automatically eligible for substantially improved medical, rehabilitation, and income support benefits.

People who are more seriously and permanently injured may also be eligible to receive a one-time permanent impairment benefit, which is akin to pain and suffering damages in a court system.

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In Alberta today, the maximum level of benefits available to injured Albertans, regardless of fault, is $50,000 in medical and rehabilitation benefits for two years following the collision. In contrast, under many Care-First models like in Manitoba, injured persons can access an unlimited amount of medical and rehabilitation benefits, for the whole of their lives.

Also, in Alberta the maximum level of income support is $600 a week ($31,200 a year) for a maximum of two years. Under a Care-First model, the benefits will cover a gross income level of $120,000, with the opportunity for the insured person to purchase even more coverage.

In Alberta, there is no requirement for a permanent impairment benefit. Under a Care-First model, the permanent impairment could be just shy of $300,000 for Albertans who suffer more serious injuries.

Other benefits will be available under the Care-First model to address other costs attributable to a motor vehicle collision, such as grief counselling, death benefits, and other out-of-pocket expenses.

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While much of the concern and focus of auto insurance has been directed at private passenger vehicles, such as the cars, trucks, and SUVs that Albertans drive, the proposed reforms will apply to all type of automobile insurance including commercial vehicles.