For those who drive, auto insurance is an important part of your life. It provides financial protection and peace of mind in the event of an accident.
However, not all insurance systems are created equally. One key distinction is between no-fault and at-fault insurance.
If you’re worried about how no-fault insurance may affect your car insurance, our Edmonton insurance brokers are here to help by explaining what it is and its potential impact.
What is No-Fault Insurance?
No-fault insurance is a system where each driver’s insurance company covers their policyholder’s damages, regardless of who is at fault for the accident.
Currently, the at-fault insurance system places the fault on the driver responsible for the accident, and the driver or their insurance company is required to pay for the damages.
No-fault insurance aims to simplify the claims process and reduce the need for litigation.
No-Fault or At-Fault: Which One is Better for Drivers?
Each auto insurance system offers different benefits and drawbacks for Edmonton drivers, significantly impacting their experiences and costs.
Let’s take a look at the pros and cons of each:
No-Fault Pros and Cons
The main advantage of no-fault insurance is the simplified claims process. It streamlines the claims process, making it faster and less contentious since each party deals with their own insurer.
It also reduces litigation, the number of lawsuits, and legal costs while providing more prompt medical coverage to injured parties. Injured parties can receive medical attention more quickly as their insurance covers expenses regardless of fault.
However, the cost of insuring all parties, regardless of fault, can lead to higher premiums for policyholders.
It also limits legal recourse, giving drivers fewer options to sue for pain and suffering while limiting their ability to seek full compensation.
No-fault insurance can also reduce the incentive for careful driving, potentially leading to higher accident rates.
At-Fault Pros and Cons
Since only the at-fault party’s insurance pays for damages, premiums can be lower in an at-fault system.
Plus, victims of accidents can sue the at-fault driver for comprehensive compensation, including pain and suffering.
Drivers also have a strong incentive to drive carefully to avoid being deemed at fault and facing higher insurance costs.
On the downside, determining fault can complicate and delay the claims process, leading to prolonged disputes and legal battles. Fault-based systems often result in more lawsuits, driving up legal costs for all parties involved.
How No-Fault Insurance Changes Compensation for Injured Drivers
The shift from a fault-based system to no-fault insurance can significantly change how compensation is handled for injured drivers. Understanding these changes is important for assessing the impact on Alberta drivers.
Compensation Under Tort Law in Alberta
Under a tort law (fault-based) system, individuals injured by reckless drivers can recover monetary compensation from the at-fault driver’s insurance company.
This compensation can cover a wide range of damages, including pain and suffering, wage loss, medical expenses, and other related costs. With this system, victims are adequately compensated for their losses.
Proposed Compensation Under No-Fault Insurance
The Insurance Bureau of Canada (IBC) proposes a shift to a no-fault system where injured parties would rely on their own insurance coverage for benefits.
This change means that victims would claim benefits from their policy instead of seeking compensation from the at-fault driver’s insurer.
While this can make access to funds happen more quickly, it may limit the amount and type of compensation available.
Effects on Good Drivers vs. Bad Drivers
In a no-fault system, good drivers might end up paying for the costs of bad drivers through higher premiums.
Since the system does not penalize at-fault drivers with higher insurance costs, there is less financial incentive for safe driving.
On the other hand, bad drivers benefit from lower premiums and broader coverage, potentially reducing their accountability for negligent behavior.
Which Provinces Have No-Fault Insurance?
Several provinces in Canada have already implemented no-fault insurance systems, each with its unique structure and regulations.
Quebec, for instance, operates a pure no-fault system where compensation is provided through a public insurance plan.
Other provinces, like Ontario and Manitoba, have hybrid systems that combine no-fault benefits with limited tort options, allowing lawsuits under specific conditions.
These diverse implementations offer valuable insight into the potential effects of adopting no-fault insurance in Alberta.
Is No-Fault Insurance Coming to Edmonton?
It’s settled: No-fault insurance is coming to Alberta under the name “Care-first” auto insurance. The provincial government passed the core legislation (Bill 47) in May 2025, setting the official implementation date for January 1, 2027. This reform is intended to stabilize premiums by cutting legal costs associated with personal injury claims.
This change will affect all Edmonton drivers, but the current at-fault system remains in effect for any accident that occurs before the 2027 start date.
The government is now finalizing the regulations that will govern the benefits and claims tribunal.
Core Components of the “Care-first” System
The Care-first system, intended to stabilize premiums by cutting legal costs, largely restricts the right to sue the at-fault driver for injuries. Instead, all injured parties will receive enhanced medical and income benefits directly from their own insurer, regardless of fault. Lawsuits will only be allowed in rare, specific circumstances.
However, the reform is highly debated: critics argue the change undermines the rights of innocent victims to seek full compensation for non-economic losses (pain and suffering) and reduces the financial accountability for negligent drivers.
How Is Your Insurance Affected?
While the full Care-first system begins in 2027, your premium is already being affected, with “Good Driver” rate increases now capped at 7.5% annually in 2025 and 2026.
The most critical action you can take is to discuss your policy with your Edmonton insurance broker before the January 1, 2027 deadline. They can ensure your coverage is optimized for the future and clarify how the system change will specifically affect your existing protection and costs.
Navigating Future Changes with ARC Insurance
The debate over the details of Care-first is far from settled. If you have opinions about these proposed changes, reach out to your local representatives and voice your concerns.
If you have any questions about how Care-first insurance could affect your coverage or premiums, or if you want to make sure you are as protected as possible, ARC Insurance is here to help.
Our team of experts can provide guidance, answer your questions, and help you find the best insurance solutions tailored to your needs. Get in touch with us today to secure peace of mind before the changes take effect.
