Province says drivers will save $366 per year under auto insurance system coming in for 2027

Traffic on Edmonton's Rabbit Hill Road SW on Sept. 15, 2025.

Alberta drivers will see a new, lower rate cap when the province starts its new automobile insurance system next year.

Under the “care-first” model, auto insurers will not be able to raise average rates for drivers by more than five per cent, the province said Thursday in a media release. Also, all average drivers will see insurance premiums capped at 10 per cent upon renewal under the new system, which will replace the Good Driver Rate Cap.

The new system slated to start Jan. 1 will replace the tort-based one, in which those injured in an accident can seek compensation through legal means. Instead of people suing drivers who cause crashes for compensation, insurers would pay compensation rates set by the province. Benefits for those injured in an auto crash would be available to everyone, regardless of who caused it.

The Alberta government introduced legislation last spring to change how the province’s auto-insurance system handles injury claims, with FInance Minister Nate Horner saying the new model would stabilize rates, make auto insurance more affordable and give those hurt in automobile accidents better access to supports.

The province said Thursday an independent report from consulting firm Oliver Wyman finds drivers with basic coverage can expect to save an average of $366 per year under the new system.

It said if savings aren’t realized under the care-first model, the province will look at adjusting the rate cap and modifying other policies to help drivers save money on insurance.

The provincial government says people injured in an accident will still be able to sue drivers at fault “if they experience out-of-pocket expenses that exceed the maximum amounts provided by their insurance policy.”

“Drivers with an at-fault accident or conviction under the Traffic Safety Act or the Criminal Code would still see their rates go up,” the province said in the release.

“Premiums under Care-First will be determined by individual risk factors rather than market pressures. This means good drivers will pay less and bad drivers will pay more.”

Horner said last year that at-fault drivers will still be held accountable under the new system.

“Fault still matters,” he said last March. “The system will still ensure bad drivers are held accountable through higher premiums. Albertans will still be able to sue an at-fault driver (under) certain circumstances. We have to make sure such circumstances are reasonable since lawsuits are driving increases in auto insurance.”

Horner said Alberta will be the first province in Canada to adopt a privately delivered, care-first insurance system.