New Year, New Insurance Insights
January 9, 2025
Understanding the Care-First System and Good Driver Rate Cap
Alberta’s government is introducing the new Care-First auto insurance system, designed to provide better and faster services while reducing premiums. This system aims to deliver timely medical care and income support for those injured in collisions, with an average cost saving of $400 per year for Albertans. Under Care-First, good drivers will benefit from lower rates, while at-fault drivers will pay more. The focus is on streamlining the claims process, ensuring injured individuals receive the care they need without lengthy legal battles.
It is important to understand that the Alberta government has announced that the Care-First auto insurance system will not be fully implemented until January 1, 2027. This new system aims to provide better and faster services while reducing premiums, but significant savings and benefits are not expected until then. In the meantime, it’s important for drivers to understand the Good Driver rate cap and take proactive steps to manage their insurance costs.
The Ministerial Order introduced a rate cap on January 1, 2024, for “Good Drivers” to help manage insurance costs. This cap is indexed annually for inflation and is tied to Alberta’s Consumer Price Index (CPI). The rate cap was 3.7% for policies renewing in 2024 and will increase to 7.5% for policies renewing in 2025.
To qualify as a “Good Driver,” a driver must meet the following criteria on the inception date of the renewal of their auto insurance policy:
- No at-fault claims in the previous six years
- No criminal code convictions in the previous four years
- No major convictions in the previous three years
- No more than one minor conviction in the previous three years
The rate cap for “Good Drivers” does not apply to:
- An insured whose risk profile has materially changed by: a) Moving to a higher-risk rating territory, b) Adding or substituting a vehicle, c) Significantly modifying their existing vehicle, or d) Adding a new driver with a worse driving record
- New business
- The Grid base premium for basic automobile insurance coverage.
Given the current landscape, drivers need to be proactive in managing their auto insurance costs. Here are some steps to help ensure you get the best pricing:
- Maintain a Clean Driving Record: Avoid at-fault accidents and traffic violations to qualify as a “Good Driver” and benefit from the rate cap.
- Review and Update Your Policy Regularly: Regularly review your policy to ensure it reflects your current situation and take advantage of any available discounts
- Bundle Policies: Consider bundling your auto insurance with other policies, such as home insurance, to receive multi-policy discounts
By understanding the Care-First system and the Good Driver rate cap and by taking proactive steps, you can better manage your auto insurance costs during this transitional period.
Linked Sources:
NO-FAULT AUTOMOBILE INSURANCE: What This Means for You, CAM LLP Injury Lawyers
Rate hikes, no-fault claims in new rules pitched for Alberta auto insurance – By Lisa Johnson
AIRB – Frequently Asked Questions (PDF) – 2024 Good Driver Rate Cap