Alberta Introduces New Auto Insurance Rate Cap, Dubbing It a 'Care-First' Model
The province is hailing cost-saving measures for Albertans. Drivers in Alberta will now have increases to their insurance premiums capped at 10 per cent in exchange for fewer lawsuits arising from accidents. The rule is part of a new set of regulations introduced by the province, which hails them as cost-saving measures for Albertans.
Beginning January, the province will also forbid insurers to raise their overall rates by five per cent per year, meaning that while your specific premium can rise up to a maximum of 10 per cent, your insurer cannot collect more than five per cent in rate increases across its auto-insurance operation. Exceptions include a recent at-fault accident, a major driving conviction, changes in insurance coverage and buying a more costly vehicle.
The province says this new measure could result in annual average savings of $366 in insurance premiums for an individual driver. Underlying these savings is what the province dubs a Care-First model, in which victims of accidents will not be able to sue the driver, except when the driver is convicted of Criminal Code driving-related offences or when they experience out-of-pocket expenses that exceed the maximum amounts provided by their insurance policy. Instead, they would have to file a claim with their own insurer.
The model covers a range of supports, including physiotherapy, chiropractic care, massage therapy, psychological counselling, dental work and ambulance services. The new framework also accommodates wage replacement support if the accident leaves one unable to work. If the insurer declines a claim, instead of a lawsuit, victims will now be able to appeal the decision at a tribunal specifically set up for such cases.
However, the means of recourse remain unclear for those without a car and, as a result, without an insurance policy. In previous instances, the drivers' insurer was responsible for compensating affected pedestrians without an insurance policy. Under the previous system, medical and rehabilitation benefits were capped at $50,000, which had to be paid over two years after the accident, and the victim then had the ability to sue the driver for the entirety of their loss.
Province Touts Saving Costs on Court Cases
The new rules, according to law firm Brownlee and LLP, limit the ability to sue, but also raise the benefits up to 90 per cent of the claimant’s net income up to a maximum annual gross income of $125,000, payable up to the age of 65. However, the regulations could also hurt students. Under the new rules, the law firm anticipates injured minors and students to receive lump sums of a maximum of $6,427 for those in kindergarten to Grade 8, $11,910 for students in Grades 9 to 12 and $23,824 for people studying in post-secondary institutions.
