Alberta Introduces New Auto Insurance System with Enhanced Benefits
Alberta has unveiled significant updates to its new auto insurance system, which aims to provide better support for accident victims. The province introduced the Automobile Insurance Act in May, marking a shift towards what it calls a “care-first” approach. This model is set to launch on January 1, 2027, and includes detailed guidelines on how much Albertans will be compensated following motor vehicle accidents.
How Much Will Albertans Receive for Recovery?
Under the “Care-First” model, there are two main categories of benefits: income replacement and recovery benefits. Initially, these benefits will align with Manitoba’s levels, except for income replacement, which will be $5,000 higher to reflect Alberta’s higher average income. Over time, these benefits will be adjusted annually for inflation.
The system ensures that all injured parties, including cyclists and pedestrians, have access to necessary medical and rehabilitation services regardless of their insurance coverage. Medical and rehabilitation benefits will be unlimited for reasonable and necessary expenses until maximum medical recovery is achieved. For those requiring personal care, payments will be $6,781 per month for catastrophic injuries and $5,671 per month for non-catastrophic injuries.
Individuals with permanent impairments could receive lump-sum payments up to $298,520 for catastrophic injuries and up to $189,055 for non-catastrophic injuries. In cases of death resulting from an accident, funeral costs could be covered up to $10,308, and grief counseling could be provided up to $4,310 per person. Additional payments may also be available for spouses or dependants.
Income Replacement Benefits
The new model offers income replacement benefits of up to 90% of net income, capped at a maximum annual gross income of $125,000 until age 65. For those working part-time, temporarily, or not employed at the time of the accident, income replacement will be recalculated after 180 days.
Seniors aged 65 or older will receive a “Retirement Income Benefit,” providing lifetime retirement income for individuals with permanent disabilities. This benefit will be based on 70% of the individual’s net income, minus other pension incomes like the Canada Pension Plan or Old Age Security.
Additionally, a lump sum may be given for each school year not completed by a minor related to an accident, with amounts varying by education level. Injured parents may also qualify for child-care expense reimbursements, and caregivers can receive weekly payments starting at $547 for one dependent, increasing with more dependents.
However, claimants with certain criminal convictions, such as driving-related, murder-related, or theft-related offenses, may be ineligible for some benefits.
Navigating the New System
Insurance companies are required to assist Albertans in making claims, ensuring they understand their benefits and helping them file claims. Under the new system, each driver’s insurance company covers their medical care and rehabilitation, regardless of who caused the accident. Claimants must receive written decisions from insurers, along with reasoning, and can request reviews or appeal to a dispute tribunal if needed.
A consumer support function will also be established to address complaints, answer inquiries, and provide resources to help navigate the new system.
Legal Action and Dispute Resolution
Albertans injured in collisions will only be able to sue at-fault drivers for pain-and-suffering damages if the driver was convicted of an offence under the Criminal Code or Traffic Safety Act. Those facing out-of-pocket expenses beyond policy benefits can also sue the at-fault driver for those costs.
The province plans to create an Alberta Automobile CareFirst Tribunal to handle disputes. This tribunal will conduct inquiries, request medical information, and mediate issues. Its decisions will be final and binding, though they can be subject to judicial review. The government is still considering whether to charge an application fee for appeals.
Criticism and Concerns
Despite the changes, some critics, like Alberta NDP affordability critic Sharif Haji, have raised concerns about the lack of clarity on how the reforms will reduce premiums. While the government claims the system will improve affordability, specific details on how this will be achieved remain unclear.
Overall, the new system aims to provide greater support for accident victims while streamlining the claims process. As the implementation date approaches, further details and regulations will likely be released to ensure smooth transition for all Albertans.