A complete guide to Alberta’s auto insurance reforms

Alberta's government is taking steps to combat rising insurance costs by seeking to reshape the current system. Take control of your auto insurance by comparing rates online.

Alyssa Prizzon, Content Marketing Strategist

March 5, 2026

With files from Jessica Ho.

This article was originally published on November 25, 2024 and was updated on March 5, 2026.

It’s no secret that living costs have risen in recent years, including the price of car insurance in Alberta. According to the 2026 Market & Trends Mid-Year Report from the Automobile Insurance Rate Board (AIRB), the average cost of auto insurance is $1,835 as of June 2025, making Alberta’s rates the second-highest in Canada.

After a 2024 survey of over 16,000 Albertans about their concerns and priorities around auto insurance, the Alberta government enacted major reforms, including adjusting the ‘good driver’ rate cap to 7.5% and introducing a new ‘Care-First’ auto insurance system.

The adjusted rate cap was implemented on January 1, 2025, in place for two years, and the new auto system is set to begin in 2027. While these changes are intended to make insurance more affordable and focus on care, it remains to be determined if they will deliver.

Let’s break down what Alberta drivers think of these changes, what’s actually changing, why it matters, and how it could affect your wallet.

Key takeaways

Ratehub surveyed Alberta drivers to learn their views on the province’s auto reform. Most respondents were unaware of the rate cap and unsure what changes were coming when asked about the care-first model.
Alberta’s government increased the ‘good driver’ rate cap from 3.7% to 7.5% for a two-year period, starting January 1, 2025. The rate changes only apply when a policy is up for renewal, meaning premiums will be impacted as drivers renew coverage.
The government will be working towards introducing a new ‘Care-First’ system for 2027, focused on adopting a more traditional no-fault auto insurance system.
These proposed reforms are the province's most drastic attempt to salvage its struggling private auto insurance market, aiming to prevent a mass exodus of carriers by cutting costs and inefficiencies, while also helping reduce insurance costs.
The 25% U.S. auto tariffs are driving up the cost to repair and replace vehicles across Canada. These increased costs aren’t reflected in the ‘good driver’ rate cap, which could lead to less availability of auto insurance coverage in the province.

Ratehub’s 2026 auto insurance survey: What do Albertans think of the changes?

One year into the rate cap adjustment and about a year from the Care-First auto insurance system, we conducted a province-wide survey to see how Alberta drivers feel about the changes.

Here’s what we found:

60% are not aware of the ‘good driver’ rate cap in the province.
46% are unsure what changes are coming to auto insurance (Care-First system).
94% are most concerned about rising insurance costs.

Surprisingly, many Alberta drivers are unaware of both the enacted and upcoming changes to auto insurance. Just 47% of drivers report feeling worried about the care-first model scheduled for 2027. Yet, the majority of drivers feel the pressure on their wallets.

When asked about their experiences finding coverage, as many providers have left the market, we found that:

60% have not had any challenges finding coverage at the time of renewal.
29% have experienced some difficulties or significant challenges.
11% either haven’t renewed a policy recently or are new drivers.

Other concerns drivers have reported about auto insurance in the province include difficulty understanding coverage options (42%), the quality of customer service (38%), limited coverage availability (33%), and insurers leaving the market (33%).

The survey results reveal that while rising costs are putting pressure on drivers, there’s a lack of information that is leaving many people in the dark. This could result in drivers being even more uncertain about auto insurance coverage next year when the care-first system is implemented.

What are the proposed government reforms for auto insurance in Alberta?

Frustrated by increasing costs, Albertans went to their government demanding help. The government responded by increasing the ‘good driver’ rate cap and introducing a new insurance model that is scheduled for January 2027.

Starting in January 2025, Alberta introduced a 7.5% rate cap on premium increases for good drivers. This is an increase over 2023’s 3.7% cap, which the government implemented at the start of 2024. The 7.5% rate cap is only applied at the time of policy renewal and is limited to drivers who fit the ‘good driver’ criteria. For more info, visit the AIRB FAQ.

The key definition for this cap is what constitutes a ‘good driver’? This is someone with no at-fault claims in the past six years, no Criminal Code traffic convictions in the past four years, no major traffic convictions in the past three years, and no more than one minor traffic conviction in the past three years.

Also read: How claims affect your car insurance

This cap is designed to keep premiums manageable for good drivers while ensuring insurers can stay financially stable. It means responsible drivers won’t face steep rate hikes, even as insurance prices rise. The caveat is that you must remain with your existing insurance company, as the cap only applies to policy renewals and not if you shop around for a new policy. It also does not help any new drivers entering the market, as they will have zero experience and no driving profile.

The introduction of this cap is part of a broader transition to Alberta's new care-first insurance system, expected to be fully rolled out by January 2027. Unlike the current model, where drivers often face lengthy court battles to get compensation, the care-first approach focuses on medical treatment and recovery in a more efficient system where victims will have quicker access to compensation.

The system aims to provide increased benefits coverage, including changes to the following:

Medical and rehabilitation are currently limited to medically necessary expenses up to $50,000 for 2 years following a collision. This would increase to unlimited for eligible expenses over your lifetime.
Income replacement benefit is currently the lesser of $600 per week and 80% average gross earnings for up to 2 years following a collision. This would increase to a maximum of 90% of net income, up to a gross income threshold of $120,000, payable until age 65.
Insured drivers injured in a collision will now deal directly with their insurance company for any accident benefits-related claims, instead of having to sue for coverage. This is more in line with a no-fault auto insurance system.

Under this system, lifelong care will be provided for catastrophic injuries, and support for serious injuries will continue until full recovery.

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Will the auto reform changes help drivers find cheaper car insurance in Alberta?

According to Premier Danielle Smith, these changes could save Albertans up to $400 annually once the new system is in place. This would be accomplished by reducing the need for litigation, which minimizes legal costs that currently drive up premiums.

However, not everyone is convinced. Critics argue that capping rate increases might only delay the inevitable. Projections from accounting firm MNP predict that auto insurance premiums in Alberta are set to climb significantly over the next decade.

For now, shopping around for quotes remains one of the best ways to score cheap insurance in Alberta. Comparing providers ensures you’re getting the best deal, even as the system evolves.

How do the U.S. auto tariffs impact coverage availability in Alberta?

Another consideration for Albertans and insurance providers in the province is the 25% U.S. auto tariffs and the 50% tariffs on steel and aluminum. Both severely impact vehicle prices, repairs, and replacement values across Canada, driving up insurance premiums. The Insurance Bureau of Canada (IBC) recently commissioned an analysis from Deloitte that found the 25% U.S. and reciprocal Canadian tariffs would increase vehicle prices and replacement parts by up to 10.9%, with the impact on insurance premiums in Alberta rising by up to 5%.

As it stands, in 2024, Alberta auto insurers paid out $1.17 in claims for every $1 they earned in premiums due to the ‘good driver’ rate cap. According to the IBC, the impact of the auto tariffs is not reflected in the rate cap. This means that unless insurance providers can adjust premiums to make up for the tariffs, they may have to reduce coverage availability to avoid paying out-of-pocket for claims. This will make securing auto insurance even more challenging for Alberta’s drivers.

Frequently asked questions

Why are Alberta car insurance costs so high?

Car insurance in Alberta is high due to several factors, including the growing cost of legal battles in the province, the rising price of vehicle repairs and maintenance, significant levels of vehicle theft and damage caused by natural disasters. A report from Alberta's superintendent of insurance reveals that insurers lost more than $1.2 billion in 2024, due to claims payouts exceeding the premiums drivers paid; both the Calgary hailstorm and Jasper wildfire were cited as drivers of the insured losses. These challenges have pushed up claim costs for insurers, causing them to raise premiums to cover the additional expenses.

Also read: How auto theft trends impact car insurance

How will Alberta's insurance changes impact new drivers and newcomers?

Alberta’s insurance changes, including the 7.5% rate cap, only apply to policy renewals. This means newcomers to the province, policy shoppers, and young drivers will likely face higher rates. ‘Bad drivers or non-good-drivers’ are not sheltered by the cap and will be subject to approved rate increase filings by their carrier at renewal. Adding a vehicle or moving to a new neighbourhood could also bump drivers out of the “good driver” category, potentially leading to a hefty premium increase. Families adding young drivers to their policies should expect similar challenges.

How will Calgary and Edmonton be impacted by Alberta’s auto reform?

As Alberta’s largest cities, Calgary and Edmonton are home to the highest concentration of drivers in the province. The new system could significantly impact urban drivers, especially those navigating increasingly congested roads. Auto insurance in Calgary and Edmonton is often more expensive due to higher risks of accidents and theft. With reforms aiming to stabilize rates, drivers in these cities could finally see some relief, but the long-term effects remain to be seen.

The bottom line

Alberta’s auto insurance reforms are a step toward affordability and care-focused coverage, but they’re not without challenges. While the government’s promises sound great on paper, up to $400 in annual savings, lifelong care for severe injuries, and capped rate increases, it’s unclear how well these changes will work in practice. For now, drivers should keep an eye on their renewal notices, compare auto insurance quotes, and look for additional ways to reduce their premiums to help ease the financial burden of insuring their car.

Categories	Auto Insurance Insurance
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