Alberta drivers are six months away from significant auto insurance savings under the province's new Care-First system, according to the Insurance Bureau of Canada (IBC).
Beginning January 1, 2027, drivers are projected to save an average of $260 annually while gaining access to what IBC described as Canada's most comprehensive recovery benefits package if they are injured in a collision. In total, Alberta's approximately 3.1 million insured drivers are projected to save more than $830 million.
Care-First moves Alberta to a no-fault model, in which most drivers injured in a collision will access medical care, rehabilitation, and income support directly through their insurer rather than through a lawsuit against the at-fault driver. The right to sue will be preserved in narrower circumstances, including where the at-fault driver is convicted of certain criminal or Traffic Safety Act offenses, such as impaired or dangerous driving, or where out-of-pocket expenses exceed what a policy covers.
Under the new system, injured drivers may also access a permanent impairment lump sum of up to roughly $298,520 for catastrophic injuries, along with income replacement based on gross income up to $125,000 annually, payable until age 65.
IBC has said legal costs have been the primary driver of rising premiums in Alberta, with bodily injury litigation costs climbing 65% over the past five years. Alberta's government has separately introduced a rate cap alongside the reform, limiting average premium increases to 5% and capping individual driver increases at 10% at renewal through to the system's launch.
“Alberta drivers pay some of the highest auto insurance premiums in Canada, but the trend of rising premiums will be reversed when Care-First takes effect on January 1, 2027," said Aaron Sutherland, vice-president, Pacific and Western at IBC. "Saving hundreds of dollars annually on auto insurance will be welcome news to Alberta drivers, as Care-First will help reduce rising legal costs and redirect these to improve affordability and expanded care for those injured in collisions.”
Statistics Canada data showed Alberta auto insurance premiums are up 26% year over year, close to five times the national average. ATB Financial recently flagged the increase in its commentary on inflation data, noting Alberta is experiencing its highest inflation in more than two years, driven primarily by the jump in vehicle insurance premiums.
IBC attributed the increase to several factors, including a sharp rise in bodily injury litigation, with the number of lawsuits reportedly doubling over the past year as lawyers file claims ahead of the Care-First transition; continued severe weather events, including hailstorms, which have driven up claims frequency and severity across the province; and inflation in vehicle repair costs tied to parts, labor, and increasingly complex vehicle technology.
The reform also remains politically contested.
At the United Conservative Party's annual general meeting in November 2025, party members voted to support repealing the no-fault legislation in favor of retaining the existing tort-based system, though the government has continued to move forward with implementation.
Plaintiff-side lawyers and some advocacy groups have also raised concerns that the shift limits Albertans' ability to sue for damages such as pain and suffering and reduces access to the courts, arguing that promised savings may not materialize once the system is in place.
Recent polling by Yorkville Strategies found two-thirds of Albertans support the Care-First reforms, with lower prices cited as the most important factor by most respondents. The polling also found that a majority of respondents supported reducing the ability to sue in exchange for the savings and expanded benefits the new system offers.
“The new auto insurance system is coming at a critical time for Alberta drivers, with recent inflation numbers showing that the cost of auto insurance has been increasing more in this province than anywhere else in Canada," Sutherland added. "Alberta drivers deserve a break from these rising costs and help is on the way. And most importantly, they don't have to do anything to realize these new benefits.”
With six months remaining before Care-First takes effect, the coming period is likely to see continued debate between insurers, government, and the legal profession over whether the reform delivers the savings and improved outcomes each side claims it will.
