Alberta’s New Care-First Auto Insurance Explained

Auto insurance in Alberta is undergoing its biggest transformation in decades. On January 1, 2027, the province’s new Care-First auto insurance model will officially replace the traditional tort-based system. 

The Government of Alberta says it designed this new framework to prioritize timely medical treatment and financial recovery over lengthy, expensive legal disputes. By shifting from a fault-based litigation system to a care-focused model, the province fundamentally changes how accident victims are treated, how they access benefits, and how disputes are resolved. 

Because this transition applies to all insured drivers, it's important to understand how the new system will affect your claims, benefits and available coverage options. 

What drivers need to know

Starting January 1, 2027, every auto insurance policy in Alberta will automatically transition to the Care-First model, as mandated by the provincial government. This transition is not optional and will apply to all insured drivers, regardless of when your policy is scheduled for renewal. 

Under this new system, if you are injured in a collision—whether you are an at-fault driver, a passenger, a pedestrian, or a cyclist—your own auto insurance will serve as the primary source of coverage for your care and treatment. This allows you to bypass the stressful and lengthy process of suing in court, giving you direct, immediate access to enhanced medical and rehabilitation benefits through your insurer. 

Because this new system changes how your policy operates, now is the perfect time to be proactive. While the transition is automatic, any premium relief you see at renewal will still be determined by your individual pricing factors. For example, a driver with a clean record and a safe commute may see significant savings, whereas someone with recent at-fault collisions or living in a high-theft postal code may see limited relief. 

To avoid unexpected coverage gaps in the new year, we recommend reviewing your policy with an advisor to explore optional coverage add-ons that may be available to you. 

Why is this change happening? 

The Care-First system, also known as the reform, was introduced to curb Alberta's rising auto insurance rates, which have been driven to unsustainable levels by soaring bodily injury claims and litigation costs. Recent data from the General Insurance Statistical Agency (GISA) states that more than 50% of premiums today go toward costs associated with litigation and injury claim settlements. 

According to the Insurance Bureau of Canada (IBC), the new model replaces a combative litigation system with faster, direct-to-consumer medical and financial support. By taking costly legal battles out of the equation, the province expects the overall cost of injury claims to fall substantially.  

Without this structural reform, insurance was projected to become increasingly unaffordable for everyday Albertans. 

The new and improved system 

Under the traditional tort system, auto insurance is fault-based, and accident victims are limited to a strict cap of $50,000 in medical and rehabilitation benefits. To cover long-term care, major lost wages, or pain and suffering, injured individuals often must hire a lawyer and sue the at-fault driver in court—a stressful process that can take years to resolve. 

Under the new Care-First system, this dynamic has drastically changed: 

• Automatic care: Access to medical and rehabilitation benefits is immediate, guaranteed, and entirely decoupled from who caused the crash. You deal directly with your own insurance provider. 
   

• Uncapped benefits: Standard medical and rehab limits are completely uncapped for reasonable and necessary care, eliminating the old $50,000 limit.  
   

• Restricted right to sue: In exchange for these guaranteed benefits, your right to sue is heavily restricted. Under Care-First, you can no longer sue an at-fault driver for injury damages unless they are convicted of serious offences under the Criminal Code or Traffic Safety Act, such as impaired or dangerous driving. 

This no-fault system will provide improved medical, rehabilitation, and income support to all accident victims, regardless of fault, while holding at-fault drivers accountable through premiums. 

A new permanent impairment benefit will be also available for life-altering injuries, and all benefit amounts will be indexed for inflation. By reducing litigation costs, Care-First aims to stabilize and reduce third-party liability premiums.

Accident benefits upgraded 

The Care-First model introduces massive upgrades to financial support that simply did not exist under the old tort system. Here is how accident benefits will look after Jan 1, 2027: 

• Permanent Impairment Benefits: While completely unavailable under the old system, the new model now offers up to $298,520 for catastrophic injuries and up to $189,055 for non-catastrophic injuries. 
   

• Death Benefits: Funeral expense coverage is jumping from $6,150 to $10,308. Even more significant, spousal survivor payouts are increasing from a flat $25,000 to a maximum of $600,000 (tied to the deceased’s gross yearly income). 
   

• Daily Out-of-Pocket Expenses: The old system ignores daily recovery costs, while the new model introduces helpful allowances for: 
                                     - Caregiver support (up to $719/week for 4+ dependents) 
                                      - Childcare reimbursement (up to $283/week for 4+ children) 
                                      - Student protection (lump-sum payments for injured minors/students) 
                                      - Daily essentials (meal, clothing, and critical care allowances) 

Under the old system, injured drivers often had to wait months or even years for a legal settlement to pay for these expenses. With the Care-First model, there’s no more waiting for support as treatment and benefits begin almost immediately following a collision.

Key Pillars of the Care-First Model 

The provincial government designed and implemented the Care-First model to fix a widely criticized “broken” system. It was done through several key factors such as driving down premium costs, prioritizing immediate medical care over legal battles, and fixing outdated benefit caps.  

Here is a quick overview of the key changes: 

1. "Care Over Courts" = Reduced Litigation 

• Direct Access to Benefits: If you are injured in a motor vehicle accident, you will access medical care and income support directly through your own insurance provider, regardless of who caused the accident. 
   

• Limited Right to Sue: You can no longer sue an at-fault driver for injury damages except under limited serious circumstances—such as when the at-fault driver is convicted of serious Traffic Safety Act offences or Criminal Code violations (like impaired or dangerous driving). 

*Injured parties largely lose their ability to sue an at-fault driver for additional compensation. 

2. Enhanced Medical & Rehabilitation Benefits 

• Unlimited Care: Under Care-First, eligible medical treatments (such as chiropractic, physiotherapy, and psychological care) will have no overall dollar or time limits as long as they support your recovery. 
   

• Catastrophic Coverage: For severe injuries, individuals may receive a permanent impairment lump-sum payment of up to $295,000, alongside critical care coverage, home accessibility renovations, and vehicle adaptations. Non-catastrophic injuries can get up to $189,055. 

3. Significantly Higher Income Replacement 

• Expanded Income Support: Under the previous system, income replacement was capped at $600 per week for up to 104 weeks. 

• New Thresholds: Care-First will cover 90% of your net income up to a maximum gross annual income of roughly $125,000. This benefit is payable until retirement (age 65). 
   

• Retirement Protection: For retirees, the program will pay 70% of net retirement income (less other pensions). 

4. Premium Affordability 

By eliminating costly legal battles from claims, the government aims to stabilize and lower insurance premiums across the province. The Insurance Bureau of Canada estimates an average savings of $260 per year for Alberta drivers with the new system. It could take some time to see the savings as insurance companies will need to see how claim costs are impacted. 

What will stay the same 

While the way bodily injury claims are handled is shifting dramatically, your vehicle damage coverage, optional add-ons, and how fault is determined for the collision itself will remain completely unchanged. 

At-fault drivers will still be held fully accountable under the Care-First model. If you cause a collision, it will still impact your driving record and your insurance premiums will go up at renewal just as they always have. 

The 'no-fault' aspect of Care-First simply means that if you are hurt, you don't have to wait for a court to decide who caused the crash before you can access treatment. Physical damage policies and driver penalties remain unchanged, but the way Albertans receive medical care is transitioning to a faster, safer, and much more supportive framework 

Safe driving still protects your wallet, but if the unexpected happens, the new system ensures you can focus entirely on healing rather than fighting a legal battle. 

Will insurance premiums go down? 

According to a report commissioned by The Alberta Automobile Insurance Rate Board (AIRB), the average cost of auto insurance coverage is expected to fall by $260 per vehicle per year. That’s a meaningful reduction in a province where drivers pay among the highest premiums in Canada. 

The auto insurance regulator speculates that owners of standard passenger vehicles will save 13.7% on average, which translates to about $297 in annual savings per vehicle. Because more than 50% of auto premiums under the old system went toward litigation and legal fees, shifting to a "no-fault" direct-care model eliminates those court costs, allowing insurers to pass the savings directly back to drivers. 

Keep in mind, these numbers are an average and not a flat guarantee for everyone; how much your premium drops depends on your unique demographic.  

Here’s a breakdown of the potential savings: 

• Young Drivers: Because they historically pay the highest rates, young drivers will see the most dramatic relief. It’s projected that young male drivers could see a 30% premium reduction. 
   

• Middle-Aged Drivers: Both male and female drivers in this demographic could expect an average decrease of 14%. 
   

• Seniors: Older Albertans are projected to save about 20% on average. 
   

• Motorcycles: Some vehicle classes may see premium increases — for example, motorcycles, because they carry a much higher risk of serious injury.  

Note: your individual rate relief at renewal will still be tied to your personal driving record, location, and the optional "top-up" coverages you choose to add. Your advisor can help you review your coverage needs.

Could these changes create Canada’s best insurance coverage? 

The Insurance Bureau of Canada states that Alberta's new Care-First policies will provide Albertans with the most comprehensive coverage in the country. 

Professional-Led Care: Drivers will have access to the highest level of healthcare benefits and recovery support in Canada, with treatment plans guided entirely by medical professionals. 

Top-Tier Income Protection: The reform introduces the highest level of wage and income replacement benefits in Canada, keeping your household financially stable during recovery. 

Substantial Injury Payouts: The system offers some of the highest lump-sum payments in Canada, providing up to $298,520 in financial compensation for serious, permanent injuries. 

Retained Right to Sue: Albertans still hold the right to sue for out-of-pocket recovery expenses not covered by their policy, as well as for collisions involving Criminal Code offenses or serious Traffic Safety Act violations.