Actuarial Notes

Changes to FARM Private Passenger Vehicle Eligibility

By Facility Association · 2025 · AB.AGCY 2025-01

Facility Association bulletin AB.AGCY 2025-01 to all agents and brokers in Alberta, dated November 4, 2025, on changes to the eligibility criteria for placing private passenger vehicles in the Facility Association Residual Market (FARM). The changes take effect January 1, 2026 for new business and February 1, 2026 for renewals, and turn on whether a voluntary market insurer has declined Section C (Optional Physical Damage) coverage. A summary of the rule changes is attached to the Manual Bulletin on FA's website.

Summary of Key Changes

  • Eligibility for Section C Coverage
    • New Rule 107: a risk is eligible for placement in the residual market if a voluntary market auto insurer declines Section C coverage.
    • A Declaration Letter recording the decline, dated within 30 days of the effective date, is submitted with each new business application, and a new one at each renewal.
  • Entry Criteria for Facility Association
    • Rule 100.A.1: a risk not meeting the definition of a residual market risk in Rule 107 is not eligible for entry.
  • Coverage Amendments for Leased Vehicles or Lienholders
    • Rule 127.C: if optional physical damage coverage on a leased or liened vehicle is amended or deleted, the Servicing Carrier must notify the lessor or lienholder; where a Declaration Letter is received and coverage is amended or removed, the risk may be lapsed on renewal.
  • The Section C – Declaration form is in the Forms section of FA's website; the bulletin is distributed by the Servicing Carrier.

Related readings

  • FA Ontario Manual Bulletins (2026) — FA's Ontario manual bulletins for 2026, with the rate changes and approved rule changes

Sources