Will My Settlement Be Smaller Under No-Fault?

Yes — in most cases, settlements (or payouts) will be smaller under Alberta’s no-fault auto insurance system, which takes effect on January 1, 2027. That’s because the no-fault model replaces individualized settlements with standardized, capped benefits set by law.

How Settlements Work Today (Before 2027)

• Under Alberta’s current tort-based system, you can sue the at-fault driver.
• Your settlement may include:
  • Pain and suffering damages
  • Loss of income and future earning capacity
  • Medical and rehabilitation costs
  • Out-of-pocket expenses
  • Long-term care needs
• Settlements are tailored to the specific facts of your case — meaning more serious injuries or greater financial losses result in higher compensation.

How Settlements Will Work Under No-Fault (After 2027)

• Accident victims will claim benefits only from their own insurer.
• Compensation is limited to:Pain and suffering damages will no longer be available.
  • Medical and rehabilitation benefits
  • Income replacement (up to a capped amount)
  • Enhanced benefits for catastrophic injuries
• Settlement amounts will be standardized, not personalized.

Why Settlements Will Be Smaller

• No pain and suffering awards: These damages often form a large portion of settlements today.
• Capped income replacement: Many victims will receive less than their actual lost wages.
• No future loss recovery: Compensation for long-term financial impact is limited.
• No court process: You can’t pursue higher amounts through a lawsuit; disputes are handled through tribunals or arbitrations.

Example Scenario

• Current system: A person with a severe back injury might recover damages for pain and suffering, ongoing therapy, and loss of earning capacity, resulting in a six-figure settlement.
• No-fault system: That same person would receive capped medical and income replacement benefits only — likely far less overall.

What This Means for Albertans

For most accident victims, payouts under no-fault will be smaller than what is possible under today’s system. The only exceptions may be catastrophic injury cases, where enhanced benefits apply — but even those are subject to limits.

Key Takeaway:
Yes, most settlements will be smaller under no-fault. If your accident happens before December 31, 2026, you may still be entitled to a full settlement under the current system — but after January 1, 2027, compensation will be capped and significantly reduced.