Self-Driving Cars and Their Effect on the Future of Car Insurance
Every state in the U.S. regulates insurance for that state. Some embrace no-fault liability, which basically means that it doesn’t matter which driver is at fault. Each driver’s insurance company pays for their insured’s damages and injuries. The other type of liability insurance is tort-based. This is where liability is assessed to determine which driver(s) caused the accident. Based on the results, the respective insurance companies pay some percentage, or all, of the other party’s damages and injuries.
With self-driving cars, the insurance landscape could change considerably, although it’s still unclear at this time exactly how or to what extent.
Liability for Damage
The RAND Corporation released a study in 2014 regarding self-driving vehicles, their benefits, and liability insurance. It stated that no-fault insurance may become much more appealing when it comes to handling claims for accidents or injuries when driverless cars are involved, since the drivers are not controlling the vehicles. Already, accident rates are being reduced due to the advent of collision warning systems on vehicles, according to the Institute for Highway Safety (IIHS) and Highway Loss Data Institute (HLDI).
Liability coverage is expected to remain needed but at the same time will probably undergo some changes. Currently, drivers are the main culprits in auto accidents. Less often, product defects and road/weather conditions are responsible. With self-driving cars, it’s likely that car manufacturers and suppliers will be expected to shoulder more responsibility than they have traditionally for damages and injuries.
Comprehensive coverage could possibly be reduced. Even though repair costs could be higher due to more advanced technology in the vehicles, this would be leveraged by expectations that there would be fewer accidents.
As for underwriters, the type of driverless car involved (make and model) will become more important. Current insurance policies are based on several criteria, including how far the car is driven, how often, and where it is garaged. A driverless car may be garaged in one area, but only driven driverless in certain other designated areas. This could affect insurance policies.
It remains to be seen how auto insurance will roll out on the playing field of self-driving cars. If manufacturers are expected to take on all or the majority of responsibility, then they may become reluctant to produce these vehicles. This issue alone could produce a formidable barrier to realizing the dream of a world with self-driving cars.