Alberta’s auto insurance system is under significant strain. Following several years of government price controls, the availability of coverage is in decline and drivers face increasing challenges securing the coverage the need. Despite the government’s rate cap, premiums continue to rise driven higher by inflation in vehicle repairs and a rampant increase in legal costs associated with claims.
It can be equally challenging for many who’ve had the misfortune of being in a collision. All too often, those injured in collisions find themselves navigating a claims process that feels overly combative and complex.
In response to long-standing frustrations, the Alberta government announced a new approach in November 2024. Called Care-First, the new system will take effect January 1, 2027 and marks a significant shift in how government would like auto insurance to be delivered in the province: away from court battles and toward care.
The goal is simple — to make it easier for Albertans injured in collisions to access the medical, rehabilitation, and income supports they need. And to make auto insurance more affordable for everyone by reducing legal costs and the delays that burden the system today.
It’s an important step — but many Albertans may still be asking: What exactly is Care-First? And how will it work?
What Will Change?
When it comes to auto insurance, it’s the provincial government that defines the product that insurers must sell, and prices are chiefly dictated by the cost of claims and the balance government sets between the benefits provided and the legal costs inherent in the system.
With Care-First, Alberta is seeking to create a system that is focused on delivering care quickly, with fewer disputes and less conflict in the claims process. Recognizing that when lawyers get involved, a significant portion of a settlement doesn’t go to those who were actually injured in the collision, government is seeking to cut down legal costs and transfer these into lower premiums and improved care.
Under the new model, if you’re injured in a car crash, your benefits — medical treatment, rehabilitation, and income replacement — will be paid by your own insurer, regardless of who caused the accident. The intention is that you can immediately work with your insurer to determine the treatment and income replacement that you need, rather than relying primarily on suing the at-fault party, a process which generally takes years. There are fewer parties involved; rather than multiple insurers, lawyers, and the other person in the collision, it’s just you, your insurer and medical service providers.
If it all works as intended, this should not only improve the speed of care and make things less combative, but also reduce costs in the system. A 2023 report by accounting consulting firm MNP showed a 48% increase in collision-related lawsuits between 2018 and 2022, with litigation costs exceeding $1.2 billion. Those costs are ultimately paid by consumers through higher premiums.
The current system, driven by the legal process, is based primarily on cash pay-outs whereby insurers make a payment to settle a claim (with lawyers often getting up to a third of the pay-out). While this may seem appealing to some accident victims, the reality is it doesn’t necessarily help you get better. Under a Care-First system, your insurer will pay for treatment and other expenses with the shared goal of getting you back on your feet as soon as possible.
However, there are situations where medical treatment can only go so far, such as the case when people suffer permanent injuries. The Care-First framework will include a new lump-sum permanent impairment benefit, much like the cash settlements for pain and suffering people receive under the current system, for people with permanent impairments. By reducing the need for a long and costly legal process, these funds will go to the person who needs them, rather than a large portion going to pay lawyers.
What About the Right to Sue?
While specific details are yet to be determined, the government has indicated that Albertans will still have the right to sue in specific, serious circumstances. These include:
If the at-fault driver is convicted of a specific criminal offence (e.g., impaired or dangerous driving),
If the at-fault driver is convicted of certain offences under the Traffic Safety Act,
Or if your out-of-pocket costs exceed what’s covered by your insurer.
Overhauling a province’s insurance system is no small task and the details will be important. There will be ongoing discussions about how to get the details right as the government writes the new rules into law and the industry prepares for the January 2027 launch. If all goes well, Alberta drivers can look forward to an auto insurance system that delivers lower premiums to all drivers, and better care to collision victims.
