Rory Angold, United Car Care EVP, Shares What A Driverless Future Means for Auto Insurance

People everywhere are becoming more and more aware of the coming travel revolution that driverless vehicles will be bringing. It may be a while yet before we see the majority of vehicles on the road operating autonomously. However, as soon as any substantial number of driverless vehicles are allowed to operate on the public roadways, the auto insurance industry will have to be prepared to address the future of liability and insurance coverage. In this article, automotive industry expert Rory Angold looks at some of the issues insurers are going to face soon. 

Ever since automobiles were first developed, the legal and insurance industries have developed rules over time for determining how fault should be apportioned when accidents occur. Issues involving manufacturing errors, roadway conditions, weather, and other factors will remain in play, although human error will gradually be reduced as a contributing factor.

Driverless cars never get sleepy, distracted, or intoxicated. They will not exceed established speed limits or disregard traffic signals. While human user error is going to be taken more and more out of the equation, other fault-related factors will become more prevalent. For example, software applications that enable autonomous vehicle operation are certain to be tested as contributing to accidents, both in design and use.

Insurance and liability issues will continue to include calculation of human error in many instances and in ways that involve levels of complexity we have never dealt with before. In 2014 the Society for Automotive Engineers International developed standards for the different stages of autonomous vehicle operation.

Six levels were established, from no automation to full automation, with partial automation steps set out in-between. As technology advances and becomes more available to the average traveler, insurance and liability structures will struggle with assessing risk and responsibility with a wide variety of automation in use on the roadways. 

Every jurisdiction has rules of the road regarding safety standards and how auto insurance is designed and marketed. Every state and many cities will enact their own rules regarding which types of automation are allowed and under what conditions. Because of the shift away from human liability for accidents because of automation, insurance coverages are very likely to be required to be more expansive in the future.

Whether an autonomous vehicle will be saddled with strict liability (where all damages are assessed against the owner/insurer of the vehicle causing injury under any circumstances) or existing negligence and product liability rules are adapted to new technologies will be up to each jurisdiction. Whether some federal framework is established to cover every state uniformly or the insurance industry develops comprehensive coverage structures, there is likely to be a strong call for predictable and uniform rules throughout the country. 

The fantastic development of autonomous vehicle technology is likely to produce much higher overall highway safety and economic efficiency. However, because of the huge shifts in the insurance industry discussed herein that will also occur, there is likely to be a potentially significant lag between increased safety and reduced insurance costs.

Until auto accidents are eliminated (not possible in the real world), the need for automobile insurance will remain with us. However, as liability shifts away from humans to autonomous systems, cameras, and software, insurance companies will have to adapt to new market realities or be left behind.