Automobile insurance reform

Beginning on January 1, 2027, Alberta drivers would have:

1. More benefits – all Albertans injured in a collision would gain access to enhanced benefits, including improved medical treatment, rehabilitation, and income supports. For those with more serious, lasting injuries, a one-time permanent impairment benefit would provide compensation, serving a similar purpose to pain and suffering damages in the current court-based system. 
   
   A Care-First system offers substantial increases in the benefits all Alberta drivers would receive, for example:
   • Medical and rehabilitation is currently limited to medically necessary expenses up to $50,000 for 2 years following a collision. This would increase to unlimited for eligible expenses over your lifetime.
   • Income replacement benefit is currently the lesser of $600 per week and 80% average gross earnings for up to 2 years following a collision. This would increase to a maximum of 90% of net income, up to a gross income threshold of $120,000, payable until age 65.
2. Faster care – A Care-First model shifts the focus from court battles to meaningful support for recovery. Instead of navigating lengthy legal processes, Albertans would have access to the medical care, rehabilitation, and support they need when they need it most. This would allow Albertans to focus on getting better and back to work, not on litigation.
3. Lower prices – By reducing the need for litigation, the system minimizes legal costs that drive up premiums. This would help to deliver a more affordable and stable insurance system for all Albertans.

In summary, a Care-First system provides Alberta drivers with access to increased benefits for a reduced cost – focusing on getting the treatment they need faster. 

In 2025, government will continue supporting good drivers by capping their rate increases.

Rate increases for good drivers will be capped at 5% per year, and there will be an additional 2.5% rate rider allowed to account for natural disaster-related costs, such as the Jasper wildfire and Calgary hailstorm of 2024.

• This means good drivers’ rates will be capped at 7.5% in 2025.  

In 2024, good drivers saw their rate increases capped at 3.7%. Those drivers who did not receive the rate cap in 2024 due to implementation timing by their insurer will be capped at 3.7% in 2025, providing they still meet the definition of good driver at renewal.

A good driver is everyone except those who have any of the following:

• any at-fault accidents in the last 6 years
• any criminal code traffic convictions in the last 4 years
• any major traffic convictions in the last 3 years
• more than one minor traffic conviction in the last 3 years

Effective January 26, 2023, Alberta’s government implemented a rate increase pause on private passenger vehicle insurance until the end of the year. Some drivers may still have seen rate increases on their renewals in 2023 due to:

• previously approved rate changes
• changes in driving records, such as at-fault claims or traffic tickets
• adjustments to insurance profiles, such as a change of address or a different vehicle

In January 2023, the Superintendent of Insurance required insurers to provide premium payment plan options to most Albertans.

This measure was later permanently adopted into regulation, so Albertans would not have to fully pay their insurance premiums upfront for the entire year.

This gives Albertans the opportunity to budget for and manage their insurance costs over time.

• Read more on the Superintendent of Insurance Interpretation Bulletin

The Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020 received royal assent on December 9, 2020 to update the Insurance Act. The following changes came into effect in stages in early 2022:

• limit the number of experts involved in traffic injury lawsuits to save money and speed up resolution
• make the pre-judgement interest rate on pain and suffering damages a floating rate that begins to accumulate when written notice of an injury claim is given to an insurer or when a Statement of Claim is served
• enable direct compensation for property damage to:
  • allow not-at-fault drivers to call their own insurer to cover car repairs
  • eliminate red tape between insurers and reduce costs incurred for pursuing damages from third-parties

Associated regulation updates came into effect November 1, 2020 for most changes, and January 1, 2021 for the remainder.

Making rates more affordable

Measures to address affordability by containing cost-pressures associated with bodily injury claims:

• revised definition of “minor injury” to include more injuries that do not have a permanent negative or life-altering impact for injured individuals
• improved injury dispute resolution processes
  • for example, designating dentists as certified examiners to improve the evaluation of jaw-related injuries and help resolve disputes.

Improving care

Measures to improve care for Albertans by increasing coverage for diagnostic and treatment services and enhancing benefits included in mandatory auto insurance:

• designated more types of health professionals as able to deal with traffic injuries, on referral by a primary care practitioner, such as psychologists, dentists and occupational therapists
• included inflation-adjusted funeral benefits, grief counselling benefits and income replacement benefits
• enhanced the patient referral process and better defines a “treatment visit”
• improved clarity on coverage for medical equipment, home modifications and vehicle modifications

Providing more choice for drivers

Measures to support insurers in providing more choice in insurance products:

• enabled innovative insurance options such as pay-per-kilometre
• allowed insurers greater flexibility in applying Usage Based Insurance (UBI)
  • for example, insurers would be able to use UBI to set overall premiums in addition to current discounting purposes

The role authority of the Automobile Insurance Rate Board was expanded to provide full authority over elements such as insurer rating factors and rating programs, helping it to respond better to consumer and industry needs, modernize Alberta’s system for setting insurance premiums and the authority to establish guidelines and rules followed by industry.

Reduced driving patterns during the COVID-19 pandemic caused insurers to unexpectedly experience profits that exceeded the benchmark set by the Automobile Insurance Rate Board. Amendments to regulations subsequently granted the board more authority to regulate Alberta’s auto insurance industry and keep rates fair.

The Automobile Insurance Rate Board now has the authority to direct insurers to return premiums to drivers during exceptionally profitable years. The board is also able to request a rate filing from an insurer at any time, allowing the board to review and possibly lower rates, if necessary.

The Automobile Insurance Rate Board carefully monitors rate increases to ensure that they are reasonable and justifiable.

Direct compensation for property damage (DCPD) was enabled by legislation changes and took effect in Alberta on January 1, 2022, giving drivers more consistent treatment and faster response on collision claims.

With DCPD, drivers deal with their own insurers to cover vehicle repair costs if they are not at fault in collisions. DCPD eliminates red tape between insurers and reduces costs associated with recovering damages from third parties.

Learn more about DCPD:

• Auto Insurance Rate Board (AIRB) - Direct compensation for property damage
• Superintendent of Insurance Notices
• Direct Compensation for Property Damage Regulation

Take advantage of Alberta’s competitive auto insurance market by shopping around. Discover potential savings as different insurers may offer varying rates and coverage options. Comparing multiple rates can help you find a better deal that suits your needs and budget.

Learn more about shopping the insurance market

With over 25 private insurance companies offering private passenger vehicle coverage in Alberta, make informed purchasing decisions by exploring the various types of auto insurance and things to consider before choosing a coverage.

Learn more about purchasing insurance

Take an active role in understanding how your auto insurance rate is calculated. By understanding how your rate is calculated, you can make choices that help in lowering your rate.

Learn more about your insurance rates

Consider exploring Usage Based Insurance, also known as 'pay-how-you-drive' or 'pay-as-you-drive'. Through this type of insurance, you may be eligible for discounted rates or rewards based on your driving habits.

Learn more about UBI