Alberta’s Care-First Automobile Insurance Regime: Key Changes + Implications

The Automobile Insurance Act^[1] (the "Act") received Royal Assent on May 15, 2025, and is scheduled to take effect on January 1, 2027. Once in force, the Act will significantly alter Alberta's approach to compensating persons injured in motor vehicle accidents ("MVAs"). Subject to limited exceptions, the new regime will replace the traditional fault-based model with a comprehensive statutory benefits system under which eligible claimants receive compensation directly through their insurers, regardless of fault. The Act applies to accidents occurring on or after January 1, 2027, while the existing insurance regime continues to govern earlier accidents.^[2]

The new framework introduces a broad suite of benefits, including health care and rehabilitation, income replacement, caregiver, retirement income, permanent impairment, and death benefits. For injured persons, the regime is intended to provide access to prescribed benefits without establishing liability first. For insurers, the legislation replaces much of the uncertainty associated with tort-based claims with a statutory framework that defines entitlement to compensation and significantly restricts civil actions arising from MVAs, except in limited circumstances. Although many operational details remain subject to future regulations, the Act establishes the overall structure of Alberta's Care-First system and provides insight into how MVA related compensation will be administered beginning in 2027.

Overview of Changes

One of the most significant changes introduced by the Act is the limitation on an injured person's right to commence a lawsuit following an MVA. The Act represents a fundamental shift away from Alberta's traditional tort-based system toward a system centred on prescribed statutory benefits.

Section 4 of the Act broadly provides that "a person has no right of action and must not commence or maintain proceedings respecting bodily injury or death sustained in an accident.”^[3] However, the Act does not create an absolute prohibition on litigation. Section 80 identifies specific exceptions where litigation can be pursued including claims against individuals convicted of prescribed offences and claims against certain third parties.^[4] However, for most people injured in an MVA compensation will no longer be pursued through a claim against the at-fault driver. Instead, injured persons will generally seek compensation through statutory benefits provided by their own insurer.

The Act also establishes the Alberta Automobile Care-First Tribunal (the "Tribunal") to hear appeals from certain insurer decisions. The Tribunal is intended to provide an alternative dispute resolution mechanism with broad powers to conduct hearings, investigations, inquiries, and to facilitate settlement or mediation. Its decisions are generally final, subject to judicial review. As a result, the focus of many disputes will shift away from proving liability and assessing damages toward establishing an injured person's entitlement to prescribed statutory benefits.

Medical Treatment + Rehabilitation Benefits

Part 2, Division 2 of the Act places significant emphasis on medical treatment and rehabilitation. Under the new system, insurers will be required to pay or reimburse a claimant for "reasonable and necessary expenses."

The categories of expenses contemplated by the legislation include:

• Prescribed health-care services;
• Prescribed equipment, medication and supplies;
• Prescribed rehabilitation activities;
• Transportation, lodging, and related expenses;
• Daily living expenses where assistance is required;
• Certain expenses associated with caring for a dependant; and
• Other prescribed expenses.^[5]

A significant change from the current regime is the proposed treatment of medical and rehabilitation expenses. Under the current system, accident benefits are generally subject to an overall limit of $50,000, with expenses having to be incurred within two years, and further limits that apply to certain categories of treatment. However, under the Act medical and rehabilitation benefits will not be subject to the same limits. Instead, eligible expenses will generally be payable where they are reasonable, necessary, and otherwise satisfy the requirements of the Act and regulations. Benefits may continue until the claimant reaches maximum medical recovery, which, depending on the nature and permanence of the injury, could extend for the remainder of the claimant's life. Certain benefits will remain subject to specific limits. For example, based on the amounts proposed for 2025, personal care assistance will be capped at $5,671 per month for non-catastrophic injuries and $6,781 per month for catastrophic injuries.

Insurers will also have greater oversight of treatment. An insurer may obtain an independent medical assessment of a claimant. If the assessment concludes that further treatment is unlikely to improve function or that the claimant has reached maximum medical recovery, the insurer may no longer be required to fund certain treatment, equipment, medication, or other supports. Importantly, maximum medical recovery does not necessarily mean complete recovery. A claimant may continue to require medication, equipment, personal assistance, or other supports because of a permanent impairment. The Act contemplates continued benefits in certain circumstances where expenses remain necessary.

Permanent Impairment Benefits

Under the current system, a person who suffers a permanent injury may pursue general damages for pain and suffering through litigation. The Act replaces much of this process with a statutory permanent impairment benefit. Section 36 provides that "if an insured sustains a permanent impairment as a result of an accident, the insured is entitled to a permanent impairment benefit," subject to the requirements of the Act and regulations.

The Lieutenant Governor in Council will establish a permanent impairment schedule. The schedule will assign impairment percentages and corresponding compensation amounts based on the nature and severity of the injury. The limits proposed to date are $298,520 for catastrophic injuries and $944 to $189,055 for non-catastrophic injuries. These amounts will be indexed annually for inflation.

This approach is intended to provide greater predictability than a traditional tort assessment while reducing the need to litigate the value of general damages in individual cases. The trade-off, however, is that a standardized approach necessarily limits the extent to which compensation can be tailored to the circumstances and losses of individual claimants.

The Act also addresses death following an accident. Where a claimant dies from accident-related injuries within 90 days of the accident, the permanent impairment benefit is not payable. However, if a claimant dies for an unrelated reason within 90 days, the Act provides that the insurer must estimate the permanent impairment benefit that would have been payable and make the payment to the estate subject to applicable requirements.

Income Replacement Benefits

Part 2, Division 3 of the Act establishes a broad income replacement framework designed to compensate claimants whose ability to earn income has been affected by injuries sustained in an MVA. Rather than focusing exclusively on currently employed individuals, the Act creates distinct categories of insured persons and extends entitlement to those whose future earning opportunities may be disrupted by an accident. Sections 18 to 35 set out the primary entitlement provisions.

The Act distinguishes among several classes of insured persons including full-time earners, temporary earners, part-time earners, non-earners, students, minors, and caregivers. These categories are defined in section 1 and form the foundation for determining entitlement to income replacement and related benefits.

Full-time earners may qualify for income replacement benefits where, as a result of an MVA, they are unable to continue their full-time employment, continue additional employment held at the time of the accident, or receive Employment Insurance ("EI") benefits to which they were otherwise entitled. Where special circumstances exist, the Act permits benefits to be determined based on more remunerative employment that the claimant would have held but for those circumstances, provided the employment is consistent with the claimant's training, experience, and abilities.

The regulations, signed into law on July 31, 2026 specify that when calculating the income replacement benefit, “the income replacement benefit to which an insured is entitled…is an amount equal to 90% of the insured’s net income, determined on a yearly basis in accordance with this regulation.” For a catastrophic injury (as will be defined, subject to potential exclusions) the regulations direct that the amount will be calculated using “the industrial average wage for the calendar year before the date of the accident multiplied by 52.” To determine the industrial average, the regulations provide, “the industrial aggregate average weekly earnings for all employees of Alberta for that year, as published by Statistics Canada.”

Temporary earners and part-time earners may be entitled to income replacement benefits where accident-related injuries prevent them from continuing employment or holding employment they otherwise would have held during a prescribed period had the accident not occurred. They may also qualify if they are deprived of EI benefits to which they were entitled at the time of the accident. Similar protection is provided to non-earners. Section 21 provides that a non-earner may be entitled to an income replacement benefit where, as a result of an accident, the non-earner is unable to hold employment they would have held during a prescribed period had the accident not occurred or is deprived of EI benefits to which they were entitled at the time of the accident.

The Act also contains specialized provisions for students and minors. In addition to the separate loss-of-studies benefits established by sections 22 and 27, students and minors may be entitled to income replacement benefits where injuries prevent them from holding employment they otherwise would have obtained or interfere with their eventual transition into the workforce. Sections 24 and 25 address circumstances in which students are unable to pursue studies and work or where the effects of an accident prevent employment after studies are completed. Comparable provisions for minors are found in sections 29 and 30. In both cases, the Act provides that a claimant may receive only the greater available benefit where multiple entitlements arise.

Another notable feature of the proposed regime is the recognition of unpaid caregiving responsibilities. Section 32 establishes a caregiver benefit for claimants whose principal occupation at the time of the accident is caring, without remuneration, for children under 16 years of age or for persons who are regularly unable to hold employment.^[6] Eligibility arises where accident-related injuries prevent the claimant from continuing to provide care. For certain part-time earners and non-earners, the legislation contemplates an election between caregiver benefits and income replacement benefits after a prescribed period.^[7]

The Act also imposes several limitations on entitlement. Section 33 provides that a claimant who is 65 years of age or older and not employed at the time of the accident is generally not entitled to income replacement or retirement income benefits unless the claimant had a reasonable expectation of employment. The legislation recognizes certain circumstances that may establish such an expectation, including a written job offer or a history of seasonal, casual, or temporary employment.^[8]

The duration of benefits depends in part on the nature of the injury. For non-catastrophic injuries, income replacement benefits generally cease when the claimant regains the ability to perform the relevant employment or on the first June 30th following the later of the claimant's 65th birthday or the 5th anniversary of the commencement of entitlement. Sections 49(2) and (3) contemplate continued benefits in limited circumstances where a claimant loses employment after returning to work and establish entitlement in the event of certain relapses. Different rules apply to catastrophic injuries. Rather than identifying a return to employment as a terminating event, section 50 provides for the suspension of income replacement benefits for catastrophically injured claimants in certain circumstances including where the claimant holds employment.

Finally, section 51 addresses situations where a claimant returns to employment but earns a lower income because of accident-related limitations. In such cases, income replacement benefits may be reduced rather than eliminated. More broadly, section 35 requires insurers to determine entitlement and calculate benefits in accordance with future regulations, while section 62 provides for annual adjustments to prescribed benefit amounts and amounts used in benefit calculations. As a result, many significant questions regarding the operation and value of income replacement benefits remain dependent on regulations that have not yet been released.

Appealing an Insurer's Decision

Part 4 establishes the Tribunal which hears a claimant's appeal from an insurer's decision on a claim for compensation under Part 2. An appealable decision includes any determination the insurer makes about the claimant's compensation including whether a benefit is payable, the amount payable, and the duration of the benefit. This includes both the insurer's original decision and a decision made after reconsideration.

The Tribunal has broad powers to examine, inquire into, hear, and determine all matters and questions arising in an appeal.^[9] These include making rules regarding notice and service, the conduct of appeals, and appeal procedures generally.^[10] The Tribunal may also order the parties to undergo mediation, seek independent medical advice respecting a claimant, and order a claimant to undergo further medical examinations. On an appeal, the Tribunal may confirm, reverse, or vary the insurer's decision.^[11]

An appeal is heard by up to three members appointed by the chair. The Tribunal may accept any oral or written evidence it considers appropriate, whether or not it would be admissible in a court of law, and is not bound by the laws of evidence applicable to judicial proceedings.^[12] Notably, the Tribunal is prohibited from awarding costs in respect of an appeal.^[13]

A decision of the Tribunal on an appeal is final and is "not open to question or review in any court," subject to one exception: the decision may be challenged by an application for judicial review, provided the application is filed with the Court of King's Bench and served on the Tribunal no later than 30 days after the date of the decision.

The Tort Bar

The general rule under the Act is that a person has no right of action, and no proceeding may be brought in any court, for bodily injury or death sustained in an accident. That right is extinguished except in the limited circumstances preserved by Part 3.

• Suing an at-fault driver convicted of a serious offence: A person injured in an accident may sue a driver whose use or operation of an automobile caused the injury but only where that conduct results in a conviction for a prescribed offence, meaning a specific offence listed in the regulations, under the Criminal Code, the Traffic Safety Act or another prescribed act. The same applies where a young person is found guilty under the Youth Criminal Justice Act of a prescribed Criminal Code offence. The precise list of qualifying offences will be set by regulation. In these actions, an injured person may pursue only two types of non-pecuniary damages: general damages for pain and suffering and punitive or exemplary damages. Any award for pain and suffering must be reduced by the amount of any permanent impairment benefit the person is entitled to receive under the Act, so the statutory benefit and the damages award are not fully cumulative.

• Suing third parties that caused or contributed to the injury: The Act also preserves the right to sue third parties whose acts or omissions caused or contributed to the injury. The specified third parties include automobile manufacturers, makers and suppliers of automobile parts, automobile sellers, garage service operators, holders of liquor licences, social hosts who serve liquor, and municipalities that direct, control, and manage the road where the accident occurred, together with any further third parties added by regulation.
  

• Suing for financial losses that exceed benefit limits: A person may also sue to recover certain pecuniary or out-of-pocket losses but only to the extent that they exceed the maximum amounts payable as benefits. For example, a person earning more than the income replacement cap may sue for the shortfall in lost earnings, and a person whose reasonable medical or care expenses exceed the prescribed maximums may sue for the excess.

Implications of the Care-First System

The move to a Care-First system reshapes not only the amount of compensation available, but also the manner in which, and the party from whom, the claimant obtains it. The most immediate change concerns access. Benefits are payable regardless of fault and compensation is provided directly by the person's own insurer.  Medical and rehabilitation benefits are no longer subject to the current $50,000 limit over 2 years; instead, eligible expenses are generally payable where they are reasonable and necessary, and may continue until the claimant reaches maximum medical recovery, which in cases of serious permanent injury, could extend for the remainder of their life.

This broader access comes with a corresponding reduction in individual control. Entitlement is defined by the Act and the regulations rather than established through litigation, and the insurer becomes the front-line decision-maker on what treatment is reasonable and necessary, the amount of a benefit, and its duration. The insurer's ability to rely on an independent medical assessment to discontinue funding for treatment reflects this shift as the operative question moves from which driver was at fault to what benefits the claimant is entitled to receive. Standardized benefits, most notably the permanent impairment schedule that assigns fixed impairment percentages and corresponding compensation amounts, are intended to provide greater predictability than a traditional tort assessment. The trade-off is that a standardized approach necessarily limits the extent to which compensation can be tailored to a claimant's particular circumstances and losses.

The nature of accident-related disputes changes accordingly. Litigation directed at proving liability and assessing damages is largely displaced by the narrower question of an injured person's entitlement to prescribed statutory benefits, resolved through the insurer and, on appeal the Tribunal, rather than the courts. For most injured persons, civil actions arising from an MVA are barred with the right to sue preserved only in the limited circumstances set out in the Act. The result is a regime intended to provide faster, broader, and more certain support to the majority of injured Albertans, while significantly restricting both individualized recovery and access to the courts that characterized the fault-based system.

If you need assistance preparing for Alberta’s Care-First automobile insurance regime, including understanding how the new framework may affect claims handling, coverage and dispute resolution, contact Christine Pratt, KC in Edmonton, Carolyn Paterson in Calgary, or any member of Field Law’s Insurance Group.

^[1] SA 2025, c A-47.
^[2] Ibid, at ss 2 and 103.
^[3] Ibid, at s 4.
^[4] Ibid, at s 80(1).
^[5] Ibid, at ss 10–16.
^[6] Ibid, at s 32(1).
^[7] Ibid, at ss 32(3)–(6).
^[8] Ibid, at ss 33(2)(a) and (b).
^[9] Ibid, at s 85(1).
^[10] Ibid, at s 85(2).
^[11] Ibid.
^[12] Ibid, at s 88(2).
^[13] Ibid, at s 85(4).