Written by: David P. Wedge Background On November 21, 2024, Alberta Premier Danielle Smith accompanied by Minister of Finance Nate Horner, and Minister of Affordability and Utilities Nathan Neudorf, announced a seismic shift in compensation for those injured in motor vehicle accidents in Alberta. Alberta’s present system offers modest compensation for medical expenses, wage loss replacement, and death, grief counselling, and funeral benefits under Section B of a driver’s motor vehicle insurance policy. That compensation is limited (for example, medical expenses are capped at $50,000 and wage loss benefits only apply in cases of total disability, to a maximum of $600 per week for 104 weeks). Any additional compensation, including general damages for pain and suffering, is only obtained through the tort system: by suing the at fault driver, if any, and at fault drivers lack any additional recourse. Introducing what is dubbed a “Care First Model”, the government announced that available benefits would be increased significantly (purportedly to be the “best benefits schedule of any system in Canada”), including the introduction of statutory “pain and suffering” benefits for all drivers who are injured in an accident. In addition, by largely removing the tort system’s role, the government anticipated providing these enhanced benefits while reducing insurance premiums for Albertans. On March 24, 2025, the government unveiled Bill 47, the Automobile Insurance Act 2025. Bill 47 is the first step towards implementing Alberta’s Care First model, and helps answer some, but by no means all, of the questions raised by this dramatic change. In particular, we draw your attention to the following: Constraints on the Right to Sue If passed, Bill 47 stipulates that “no action may be commenced in any court respecting bodily injury or death sustained in an accident” except for where the at fault driver is convicted of “prescribed” Criminal Code of Canada, Traffic Safety Act or other legislative provisions, and even then one can only sue for “general damages for pain and suffering” (less any “pain and suffering” benefits paid), or punitive or exemplary damages. Historically, the Criminal Code exemption would only capture a small percentage of at fault drivers; however, expanding this to include certain Traffic Safety Act offences could be significant (particularly when it is common for an at fault driver to be ticketed for their transgression). In addition, injured parties will still be able to sue certain discrete parties such as automobile manufacturers, garages, liquor vendors, social hosts and municipalities (in respect of road design), but only for their several liability, and injured parties can sue at fault drivers for loss of earnings or medical expenses in excess of the compensation provided. It is also noteworthy that insurers will be able to subrogate against (sue) these same exempted parties to recover enhanced benefits that are paid under the Care First model. In addition to the increased benefits (the extent of which will be unveiled in the regulations), this new approach allows not just “innocent” injured parties to receive compensation, but now allows all injured parties to receive compensation on equal footing. The Extent of the Compensation Under Bill 47, injured motorists can receive compensation for: Health care and related expenses until an independent medical assessment concludes that the medical services are no longer required or until the injured motorist reaches maximum medical recovery. Rehabilitation benefits that are necessary to facilitate maximum medical recovery from the bodily injury or a return to normal life or the labour market. Transportation, lodging and other expenses necessary to receive health care or rehabilitation services, including those of a caregiver (where necessary). Daily living assistance expenses. Expenses to assist in the care of another person, where applicable. Time limited expenses to replace the labour of the injured party, where they assisted in a family business. Income replacement benefits (based on full-time, part-time, non-earner, and student earning status). Income replacement benefits in the event that an injured person’s studies are delayed. Caregiver benefits. Death, funeral and grief counselling benefits. Such other expenses as may be prescribed by regulation. In addition, injured motorists will be eligible for a “permanent impairment” benefit (replacing the prior entitlement to general damages, and presumably similar to Workers Compensation impairment benefits). Such benefits are owed regardless of fault, but may be reduced, or denied, if the insured “wilfully caused the accident”, if the insured was convicted under the Criminal Code, Traffic Safety Act or other legislation (all to be prescribed in the future), if the insured “knowingly provides false or inaccurate information to an insurer that is material to the benefit being claimed”, or if the insured “fails to comply with prescribed requirements”. Ending the Exposure Interestingly, Bill 47 states that “an insurer shall not make a lump sum payment or enter into an alternative financial arrangement with an insured in lieu of paying compensation”, meaning that insurers will be required to adjust their injured customers’ claims for as long as benefits are owing. That said, exceptions are made for “prescribed financial arrangements”: with future regulations being left to determine what that will mean. Challenging Determinations Bill 47 mandates that insurers must give insureds notice of any claim decisions in writing, along with reasons, and notice of their right to apply for a review of the decision by the insurer, or appeal the decision to “the Tribunal”. If an insurer is asked to review a decision, they will need to provide a second decision, again with written reasons, after which the insured again has a right to appeal to “the Tribunal”. The Tribunal As anticipated, the Minister will appoint members to an Alberta Automobile Care-first Tribunal, which will hear appeals from insurer-decisions. This Tribunal: Will be able to confirm, reverse or vary an insurer’s decision. Cannot award costs in respect of an appeal. Must adhere to procedural fairness and natural justice. Is not bound by the laws of evidence. and is protected by a privative clause, stating that its decisions are “final or conclusive and [are] not open to question or review in any court”, but for the ability to bring a judicial review application. Still a Long Road to Travel Unfortunately, Bill 47 leaves much to be determined by way of future regulations; in fact, the Bill sets out at least 123 areas in which the Lieutenant Governor in Council may make regulations. At first blush, this will be critical when it comes to: Setting out the extent of the potential benefits under the new system. Assessing the extent of the offences that will leave an at-fault driver exposed to potential litigation (for example, in his press conference Minister Horner suggested that distracted driving would be one such offence). Determining whether there will be a “hammer clause”, enabling the Tribunal to punish an insurer who fails to act in good faith. Establishing exactly when an insurer and insured can agree to “lump sum” future payments, if ever. Second only to the regulations in importance will be how the insurance industry responds to Bill 47. Assuming passage, there are roughly 21 months until the January 1, 2027 implementation date for the Care First regime: during which time insurers and the Superintendent of Insurance must agree on new policy wordings to give effect to these changes. Moreover, and critically, given the enhancement of benefits, the expansion of benefits to at-fault drivers, and with the seemingly limited ability to pay out claims on a lump sum basis (necessitating in some cases that claims be adjusted in perpetuity), it is difficult to see how the new system can combine enhanced protection for Albertans (which it appears to do) with premium savings for consumers.