I’m confused by no-fault insurance. Does it mean everybody’s equally at fault in a collision? Do both parties’ rates go up, no matter who actually was at fault? And is no-fault why everyone’s rates are going up? – Becca, Calgary
No-fault insurance doesn’t change who’s at fault in a crash – just what happens after.
“If you’re not at fault, instead of going to the at-fault driver’s insurance company to get the repairs done, you deal with your own insurance company,” said Rob de Pruis, national director of consumer and industry relations for the Insurance Bureau of Canada. “That’s all it means.”
Most provinces now have Direct Compensation Property Damage (DCPD), often known as no-fault insurance – Alberta switched to it in 2022, de Pruis said.
Generally, under DCPD, if somebody hits you, your insurance company fixes your vehicle and their insurance company fixes theirs.
Before that, if you were hit by another driver, you often had to deal with their insurance company – not your own – to get your car fixed or replaced.
But even with DCPD, it still matters who’s at fault, de Pruis said.
If you weren’t at fault, your insurance rates won’t go up because of the crash – even though your insurance company paid for your car’s damage, he said.
But if they’re at fault, their rates could go up – and their damage will only be covered if they have collision insurance.
Your insurance company won’t go after the at-fault driver or their insurance company – that’s called subrogation – to get their money back.
That’s what used to happen before DCPD – and it was expensive, de Pruis said.
“At the end of the day, [DCPD] is trying to reduce some of those internal expenses,” he said. “So you’re eliminating weeks or months of trying to recover that money.”
Finding fault?
All provinces with DCPD, including Alberta, Ontario and Quebec, have rules to determine who’s at fault in most situations.
Often, it’s clear. For instance, if you rear-end someone or hit them while running a red light or stop sign, you’re usually found 100 per cent at fault.
But sometimes, fault gets split between both drivers, de Pruis said.
For example, if one driver was making an unsafe left turn but the other driver was speeding, fault might be split.
Because insurance companies can use at-fault collisions to raise your rates, if fault is split, both drivers could see their rates go up.
So if DCPD was supposed to be a cost-saving move, why are overall rates climbing?
According to Statistics Canada, insurance rates went up nearly 24 per cent nationally between 2019 and 2025.
In the first half of 2025, Alberta had the second-highest average insurance premiums ($1,835) after Ontario ($2,133), according to Alberta’s Automobile Insurance Rate Board.
Insurance companies are spending more on claims because of rising repair costs and extreme weather events, including forest fires and floods, de Pruis said.
For instance, a 2024 Calgary hailstorm damaged 60,000 vehicles in “a few minutes,” he said.
“Premiums are influenced by overall claims costs,” de Pruis said. “The premiums of the many are paying for the claims of the few.”
In 2024, the most recent year with available data, Alberta insurance companies paid out 18 per cent more in claims and expenses than drivers paid in premiums.
Right to sue?
While most provinces have no-fault coverage for damage to vehicles, most don’t have it for injuries, de Pruis said.
Instead, they allow you to sue another driver – or their insurance company – for pain and suffering and economic losses on top of the accident benefits in your insurance policy.
Right now, only three provinces – British Columbia, Quebec and Manitoba – generally don’t allow you to sue.
Starting in January 2027, Alberta will also eliminate the ability to sue for collision injuries in most situations. That’s to save costs for insurance companies, de Pruis said.
“Pain and suffering is … where I’m just angry, my life has been disrupted and I want to get some type of compensation for my inconvenience," de Pruis said. “Some of those awards, if they’ve gone to court, are in the hundreds of thousands of dollars.”
A 2024 report by a consultant hired by the Alberta government predicted that the change would mean that average annual premiums could drop by hundreds of dollars.
But the Alberta Civil Trial Lawyers Association (ACTLA) said it’s still not clear how much drivers will actually save – and whether they’ll be worse off under the new system if they’re seriously injured in a collision.
“The real test of any insurance system is whether it delivers meaningful support when people are seriously injured,” Sara Winger, ACTLA executive director, said in an email statement. “Not simply whether it is cheaper upfront.”
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