Alberta’s Care-First auto insurance system, which takes effect January 1, 2027, promises substantially richer and more predictable benefits, faster access to compensation, and potentially lower auto insurance premiums.

But there’s a significant trade-off: people injured in auto accidents will lose much of their ability to sue an at-fault driver for additional compensation. 

With less than five months until Care-First is implemented, here’s what drivers in Alberta need to know about the province’s new auto insurance system.

How auto accident benefits are provided today in Alberta

Under Alberta’s current system, people injured in automobile accidents can receive certain medical, rehabilitation, and income-replacement benefits from their own insurer, regardless of who caused the accident. These are commonly known as Section B benefits. 

The Care-First system is the product of provincial legislation passed in May 2025. Although the reforms are sometimes characterized as introducing no-fault auto insurance to the province, Alberta's current system of Section B benefits has a limited form of no-fault insurance. 

Under Section B benefits, eligible medical and rehabilitation expenses, for instance, are covered to a maximum of $50,000 and only for the first two years following an accident. To obtain more compensation, including damages for pain and suffering, additional income loss and future care costs, an injured person must file a claim against the at-fault driver and, if necessary, sue. 

How lawsuits can backfire for auto accident victims

A key problem with the present system is that some claims aren’t quickly resolved. Drivers, injured parties, and their insurers may dispute who is to blame for an accident, the extent of the injuries and how much compensation is fair. Although basic Section B benefits can be paid before a lawsuit is resolved, obtaining more compensation through the legal system can take months, and at times years. Even if the plaintiff wins a large settlement, the wait for compensation can delay treatment needed to recover from injuries.

Care-First largely replaces that system for bodily injury claims. Injured parties will generally receive a much broader package of benefits through the new insurance system, regardless of who caused the accident, and without having to take legal action against the at-fault driver.

Does Care-First provide richer benefits faster?

“The benefits are significantly better if you’re injured,” says David Mayer, Director of Insurance Markets at Rates.ca. “There aren't going to be monetary and time limits on medical and rehabilitation expenses. There will be faster access to treatment because you're going to be dealing with your own insurance company and not going into litigation. Similarly, on the income-replacement side, your own insurer will provide it [compensation for lost earnings] rather than having to file lawsuits and go through legal battles.”

Enhanced benefits the Care-First system will provide include:

• Unlimited coverage of reasonable and necessary medical and rehabilitation expenses: Compensation supports an injured person’s recovery, compared with $50,000 for up to two years following an accident under the current system.
• Replacement of up to 90% of net income: Coverage is subject to a maximum gross annual income of $125,000, compared with the lesser of 80% of average gross weekly earnings or $600 a week, for up to two years under the current system.
• Lump-sum payment upfront for permanent impairment: Up to $298,520 for impairment caused by catastrophic injuries and up to $189,055 for non-catastrophic injuries. Within the current system, accident victims must sue for such compensation.
• Spousal death benefit: Up to $600,000, compared with $25,000 under the current regime. 

Comparison of Care-First and Alberta’s current auto accident benefits system

Source: A comparison of accident benefits in Alberta

Care-First provides benefits to anyone injured in an automobile accident, including cyclists and pedestrians. A full side-by-side comparison of benefits under Care-First and the current system is available here. 

Will Care-First reduce your auto-insurance premium?

Despite richer payouts, the province expects overall costs of bodily injury claims to fall substantially as accident victims spend less money on litigation—which could reduce insurance costs.

According to an analysis conducted by accounting firm MNP for the Insurance Bureau of Canada (IBC), which represents most insurers, litigation expenses accounted for 27% of bodily injury claim settlements in Alberta in 2022. The government and insurance industry argue that by largely eliminating lawsuits over automobile injuries, much of the money that now flows into the legal system can be redirected toward improving benefits and cutting insurance premiums.

The average cost of auto insurance coverage is expected to fall by $260 per vehicle per year, according to a report commissioned by Alberta’s auto insurance rate regulator. That’s a meaningful reduction in a province where drivers pay among the highest premiums in Canada. The average premium in Alberta was $1,835 in the first half of 2025, the most recent period for which figures are available.

But drivers shouldn’t assume their insurance costs will drop when they renew their policies in 2027. Premiums will continue to depend on driver-specific factors like driving history and location, plus general cost pressures related to vehicle repair and rates of auto theft—any of which can change from year to year. Care-First could also gradually affect insurance premiums as insurers determine their actual costs within the new system. "It will take some time to shake out,” says Mayer—perhaps two to five years.

Read more: Will an at-fault collision always increase my car insurance premiums?

Is Care-First worth the trade-offs?

The possibility of lower premiums appears to be one of the main reasons Albertans support the upcoming auto reforms. A survey conducted by Yorkville Strategies Inc. on behalf of IBC found that 62% of respondents either somewhat or strongly support Care-First. When asked to choose the most important benefit of the new system, 51% selected lower auto insurance prices, compared with 21% who chose enhanced benefits.

Both insurance brokers and insurers have voiced strong support for the package of reforms. But some believe the price of improved benefits is too high.

The Alberta Civil Trial Lawyers Association (ACTLA) argues that limiting the right to sue will deprive some accident victims of due process and compensation they could otherwise obtain through the courts, without guaranteeing that drivers will ultimately pay less for insurance. ACTLA recently called on the province to pause implementation of Care-First until results of a legislative review of British Columbia’s comparable no-fault system are released and fully considered.

Even regular Albertans are less keen on the changes when the key trade-off is made explicit. In the Yorkville Strategies survey 39% of respondents said they were either somewhat or strongly opposed to giving up some of their rights to sue in exchange for auto insurance savings of $300 a year.

Injured parties will still be able to sue for more compensation in some circumstances, such as when accidents involve criminal offences or serious violations of the Traffic Safety Act. In such instances, however, insurers won’t have to indemnify at-fault drivers. That means injured parties could sue only the at-fault driver—effectively limiting potential payout to whatever the driver could afford.

Would Alberta auto reforms let 'bad' drivers off the hook?

Drivers with a history of at-fault collisions, presently protected by Alberta’s grid rating system, should not assume that an overall reduction in insurance costs could translate to lower premiums for everyone. 

As part of the reforms, Alberta will end its grid rating system, which currently limits basic insurance premiums that can be charged to certain drivers considered higher risk. 

But drivers should also understand that ‘no fault’ doesn’t mean that their collision involvement disappears from the system. Insurers will continue to assign responsibility for collisions, and drivers who cause accidents are still likely to face higher insurance premiums. 

What Alberta drivers can expect January 1

Although Care-First will apply to all automobile accidents as of January 1, most drivers won’t notice any changes until their car insurance policy renews in 2027. Even if their premiums don’t change substantially, their policy wordings, coverages, and claims processes will be different. That makes the months before renewal a good time to pay closer attention to your insurance policy.

"Review your current coverage to understand exactly what you have and how Care-First could impact your specific situation,” says Mayer. “If you're a higher-income earner, for example, there will be caps on things like income replacement that you generally won't be able to sue for. But top-up options for coverages like that might become available.” He encourages drivers to ask their insurer or insurance broker if optional coverage should be reconsidered under Care-First. “Brokers will be educating their customers about the changes, but it is genuinely worthwhile to start that conversation.”

And perhaps most importantly, Alberta drivers should understand what to do if they are injured in a car accident after January 1. Under Care-First, the route to medical treatment, income replacement, and other compensation will be different from the one they've known for decades. 

Learn more: Alberta drivers can compare car insurance rates online