Alberta’s government is introducing a new adjusted rate cap alongside the province’s new Care-First auto insurance system, coming into effect on Jan. 1, 2027.
Albertans have faced rising costs when buying and renewing auto insurance, driven by legal expenses, inflation, vehicle theft, natural disasters and tariffs.
Under the adjusted rate cap, insurers will not be able to raise average rates by more than five per cent and all average drivers will see their auto insurance premiums capped at 10 per cent at renewal. The updated approach replaces the previous Good Driver Rate Cap and extends savings to more Albertans.
“Our priority is ensuring the Care-First system provides notable savings. We will continue to closely monitor the system’s implementation to ensure good Albertan drivers benefit from lower insurance costs.”
Independent analysis supports expected savings with the new system. A report by Oliver Wyman indicates that auto insurance premiums will be lower on average, once the new system is in place. Under Care-First, drivers with basic insurance coverage are expected to save an average of $366 per vehicle.
Alberta’s government is committed to ensuring Care-First delivers real savings for drivers. If the expected savings do not materialize under the new system, the government will not hesitate to take further action to protect drivers. This includes making additional adjustments to the rate cap and exploring other policies to ensure Albertans see savings.
The Care-First auto insurance system focuses on faster access to care and recovery following collisions, rather than costly, drawn-out court battles. Alberta’s current auto insurance system relies heavily on litigation, driving up legal and administrative costs that are passed on to drivers. By reducing costs, the Care-First model is expected to lower premiums while improving stability for drivers. If an Albertan is injured in a crash, their first call should be to a doctor, not a lawyer.
The model also ensures accountability for insurers. The Automobile Insurance Rate Board will continue monitoring insurer rating programs and profitability to ensure premiums remain stable during the transition.
Care-first and the adjusted rate cap will put Alberta drivers first.
Quick facts
- By definition, Care-First auto insurance is not a “no-fault” model.
- Albertans will continue to be able to sue an at-fault driver convicted of Criminal Code driving-related offences, and certain offences under the Traffic Safety Act, including impaired driving.
- Injured Albertans will be able to sue an at-fault driver 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.
- 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.
- The adjusted rate cap introduces two limits beginning January 1, 2027:
- Five per cent cap on insurers, so insurers cannot increase rates by more than five per cent per year across their overall book of business (their total customer base).
- Ten per cent cap on individuals, where each premium cannot increase by more than 10 per cent at renewal.
- The two caps work together.
- The five per cent cap controls overall increases on the system, while the 10 per cent cap protects individual drivers from large spikes.
- The adjusted rate cap will also protect Alberta drivers from drastic premium increases after they receive the expected savings in 2027.
- Under the previous Good Driver Rate Cap, even minor infractions excluded Albertans from qualifying for the 7.5 per cent cap protection.
- Drivers could lose rate protection under the current Good Driver Rate Cap if they switch their insurance company, move to a different community or replace a vehicle.