How Will Car Insurance Accommodate Self-Driving Cars?

In regards to auto insurance self-driving cars , if one were to hit another vehicle, self-driving or not, who gets the blame? The driver or ...

In regards to auto insurance self-driving cars, if one were to hit another vehicle, self-driving or not, who gets the blame? The driver or manufacturer? 

There are currently five different levels of automation technology in vehicles: 
  • No automation, 100 percent human control 
  • The vehicle has minimal systems, anti-lock brakes and cruise control 
  • More advanced, lane keeping and auto-emergency brakes 
  • The vehicle is capable of driving itself, human intervention in emergencies, like imminent collision 
  • Fully automated, no human control
Santa Clara University Law professor, Robert Peterson claims the manufacturer of the car's software would be to blame. Companies like Tesla and Volvo are already including automated parts to car manufacturing; fully-automated vehicles are still illegal on public road ways. Tesla integrated an auto-pilot mode into some of their models and Volvo offers lane-keeping and safe-distance system.  There is a wide margin of uncertainty of how and when car insurance policies will change to include self-driving cars and who holds responsibility. The integration will take years, an estimation suggests somewhere between 2020 and 2050 self-driving vehicles will be available for public use. Google's self-driving car doesn’t come equipped with steering wheels or foot pedals. 


Insurance will most likely grow more complex until the point where human caused accidents are almost non-existent, and then it'll become much simpler. The vice president of government and industry relations at Honda, Edward Cohen suggests that if the number of accidents or crashes is significantly minimal, because of self operating vehicle, insurance companies will have to change their business models. Honda is another company that is currently testing self-driving cars. Experts predict that self-driving will reduce accidents, causing premiums of car insurance to drop.  

Liberty Mutual is already offering a discount to owners of cars with assistive features, including safety enhancements that are part of collision preparation systems. Geico's spokesman, Jodi Ortega, claims they're still deciding how the new technology can affect rates in the future, based on data still being collected. Some insurance companies can still argue that there isn't enough evidence supporting the idea that automation reduces the amount of accidents, but the data is stacking up against that idea, according to Professor Peterson. 

Automated systems are still expensive and haven't been thoroughly tested and maintenance costs will be much higher, most consumers won't be able to afford the technology, right away, benefiting insurance companies who aren't ready to make the change. Andrew Rose, CEO of auto insurance comparison website Compare.com, warns that because of Tesla's sensor technology a fender-bender that would have cost two grand, cost over eight grand to fix.  

Liability will change as the technology of transportation changes. Law Professor Peterson describes that the issue of liability will be easy to follow. If the vehicle had a system defect, virus, or the owner kept up on maintenance, the argument over whose responsible will be easy to conclude. Insurance complaints will get more complicated as automated vehicle become integrated with non-automated on public roads, trying to decide exactly what went wrong to cause an accident, especially if the vehicle allows human interference options or mandatory interference when the vehicle's systems detects a sudden collision.  


The automated vehicle's systems will include a equivalent of a plane's black box, storing the users data allowing insurance companies to find out what happened in case of an accident, without a doubt. It's unclear what the future holds, if the manufacturer or the owner, or both should be covered by insurance. Professor Peterson expects the responsibility to change hands to the manufacturers as automation of vehicles increases. However, the cost of insurance will be passed to the owner of the automated vehicle at the time of purchase. A representative of a foreign car makers association, CEO of Global Automakers, John Bozzella, said it is too early to tell. It'll depend on regulations and business models for sale and use of such vehicles. While the human factor disappears from driving, the risk of hackers gaining access to a vehicle system for malicious intent is another obstacle for insurance companies. Companies fear it may be the end of their time, but that will only happen if they don't flow with the change and progression of technology. 


Author Bio:

Anand Rajendran is a freelance writer living in Chennai, India. His interest in personal finance and budgeting began when he was earning an MFA in theater, living in one of the most expensive cities in the country (Chennai, TN) on a student's budget. Today, he writes for a number of websites and keeps up his own Classic Car Insurance company named Sysive in UK.

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