Autonomous technology will have big consequences for both the insurance industry as a whole and individual plans, but its full impact remains to be seen.
Modernizing the Regulatory Environment
The regulatory environment is still catching up with autonomous technology and insurance. Various levels of government, from federal to local, play a role in regulating self-driving cars. Thus far, the federal Department of Transportation (DoT) has not issued comprehensive rules for insuring an automated vehicle, but rather has imposed voluntary safety guidelines for car manufacturers.1 It’s possible that the DoT will release guidance for insurance providers as well, but that remains to be seen.
With this federal inaction, it has largely been up to individual states and municipalities to impose rules about insuring self-driving cars. According to the National Conference of State Legislatures, 29 states have enacted legislation related to autonomous vehicles so far.2 Insurance requirements vary widely by state: Some have no legislation, while others require consumers and testing companies to have umbrella liability.
For the most part, drivers whose cars utilize automation simply need to follow their state’s auto insurance requirements. This will change as regulations evolve and technology progresses, however.
Shifts in Underwriting
Underwriting is the way insurance companies evaluate their risk in offering coverage. Traditionally, providers take various factors into account, from an individual’s driving history to their location. Advances in self-driving vehicles may lead underwriters to focus more on the make and model of the car, as the technology becomes more important than the individual sitting in the driver’s seat. In the future, driverless car manufacturers may release a set of risk factors, based on extensive real-world testing, that provide underwriting criteria across all markets.
Redefining Fault: Claims and Liability
After an accident, insurance companies determine the actor at fault, which establishes liability. Self-driving cars turn this formula on its head. Some of the most interesting questions around autonomous technology center on liability.
Whose “fault” is it when there is an incident involving a self-driving vehicle? Current laws typically punish human drivers, but what about manufacturers, software developers, and sensor vendors? Are they to blame if a fully autonomous vehicle crashes, rather than the human passenger?
Insurance providers will need to answer these questions as self-driving technology progresses. Today’s autonomous vehicles still require human attention and intervention, meaning a person can still be held liable in the event of a malfunction that leads to an accident. But experts predict that vehicle and software manufacturers will be held liable in at-fault collisions in the future.
Time will tell how this space develops. Though autonomous safety features like collision warnings and emergency brakes promise to reduce accidents, liability coverage will still be necessary for when something goes wrong.
The Future of Car Accidents
What if you get into an accident with an autonomous vehicle? For now, treat it like a normal car accident — don’t leave the scene, document everything, exchange information with the other parties, and report it to your insurance company.
We can only speculate about how car accidents will look in the future. They may occur far less frequently thanks to removal of human error. When they occur, it’s possible that all the relevant information will be reported directly to both the vehicle manufacturer and the insurance company, simplifying the process for everybody involved.
Automation and Insurance Premiums
It’s still not clear how autonomous vehicles will impact insurance rates and premiums. Some predict that rates will go up, since the technology that enables automation (sensors, cameras, computers) is expensive to source and repair. But self-driving cars are also expected to lower accident rates, meaning there is less to fix.
These two factors (cost to repair and increased safety) may offset each other, causing rates to remain the same. The price of insuring a self-driving car is ultimately an open question. Today, your auto insurance cost will be the result of all the standard factors, such as mileage, location, and driving history.
Current Insurance Options for Self-Driving Cars
Even though we are still waiting for full automation and resulting guidance, most major insurance providers already offer coverage for cars with some level of driving assistance. Here are our reviews of a few companies that cover vehicles with assistive driving features:
Tesla also offers its own insurance product. The company’s pricing structure takes into account automated assistance features as well as individual driving habits, which could improve safety and lower rates. Though it’s only available in California and Texas, this plan may be the best auto insurance for Tesla.