The Future of Autonomous Vehicles and Liability

With the rise of autonomous vehicles, the auto insurance landscape is evolving. Self-driving cars are becoming increasingly prevalent. Here’s how the role of insurance is transforming along with this technology. 

Key Takeaways

• Overall, autonomous vehicles are expected to lower liability costs by reducing accidents.
• Insurers are adapting to the decline in car ownership by offering usage-based insurance and data-driven pricing.
• Through features like advanced technology and data analysis, self-driving cars could help combat insurance fraud.
• In a world full of self-driving cars, liability for accidents is expected to shift from individual drivers to vehicle manufacturers and technology firms.

How will self-driving vehicles affect auto insurance liability?

The auto insurance system has traditionally emphasized the liability of individual drivers. As self-driving cars become more prevalent, accidents involving autonomous cars are increasingly attributed to faulty technology and algorithms rather than human error. As a result, liability for these collisions is shifting from individual drivers to the vehicle manufacturers and IT firms behind this technology. As the industry evolves, insurance companies may play a larger role in determining responsibility for self-driving vehicle accidents. 

The Current World and Autonomous Vehicles

Self-driving vehicles have become so prevalent in recent years that the autonomous driving industry is expected to bring in as much as $300 billion to $400 billion in revenue by 2035, consulting firm McKinsey & Company reported. The increase in the proportion of self-driving cars on the road affects the likelihood of motor vehicle accidents, as well as who is to blame for these collisions. That, in turn, affects the auto insurance system. 

Most crashes result from human error. Ultimately, this means that the influx of driverless automobiles should cause a decrease in the frequency of crashes and overall liability costs. Before that occurs, though, there are likely to be some growing pains. As human drivers start to get used to sharing the road with driverless cars, there may even be a temporary increase in collisions. 

The National Highway Traffic Safety Administration (NHTSA) has put the percentage of highway crashes that result from human error as high as 94%. Although the NHTSA clarified that human error is the most common “critical reason” behind most crashes, rather than a singular cause, the actions of drivers behind the wheel contribute to the majority of collisions.  

Before self-driving cars became widespread on American roads, equipment failures were cited as the critical reason for collisions in a much smaller percentage of crashes. Now that an increasing proportion of vehicles are self-driving, more liability risk will be taken on by manufacturers, component suppliers, and technology firms that construct autonomous cars and the software that operates them. 

Of course, human drivers will still be required to operate their vehicles safely and will be held accountable for accidents they cause through negligence. However, as the number of self-driving cars on the road increases, drivers will face less accountability for traffic safety overall. 

That equation will alter more significantly over the next 20 years. As it does, insurers must grapple with challenges in risk assessment procedures and insurance coverage pricing. 

Insurance For Non-Autonomous Vehicles

Currently, auto insurance rates are tier-based. The premiums a driver pays for auto insurance depend on a variety of criteria, such as: 

• Age
• Gender
• Credit score
• Driving history
• Car type  

Age is one of the main factors that affect auto insurance costs. Due to their inexperience and their statistical likelihood of accident involvement, younger drivers often pay higher insurance rates. Older drivers tend to pay less for auto insurance, in general, due to their greater safety knowledge and decreased probability of driving recklessly. 

Insurance companies have also used data that pertains to geographical location and car type (for example, sports car vs. family vehicle) to gauge policyholders’ average income. However, legislation in several jurisdictions now prohibits insurers from factoring applicants’ zip codes, credit scores, and certain other variables into their premium cost calculations. 

Telematics has been a major trend in auto insurance over the last several years, giving drivers more precise, customized rates based on their driving behavior. Because of this, telematics technology is now a standard feature of the newest generation of automobiles. Insurers can use this technology that efficiently tracks and communicates driving behavior data to precisely determine rates based on a driver’s real behavior rather than statistical analysis and conjecture.

With the increasing prevalence of connected and autonomous cars, telematics has become even more crucial.  

Companies With Autonomous Vehicles Are Driving Down Car Ownership in the US

If fewer Americans own automobiles, that means fewer people will need auto insurance. In turn, this lowers demand for what has historically been one of the insurance industry’s major sources of income. 

The now not-too-distant possibility of hailing a ride via an autonomous car may make more Americans reconsider whether car ownership is really necessary. 

This decline in the demand for auto insurance presents major obstacles for traditional insurers, who must adjust and find new revenue streams to stay relevant and competitive. 

As a result, many insurers have started investing in technology that supports usage-based insurance (UBI) offerings based on telemetry or predictive analytics. 

These services extend beyond insurance plans by giving clients access to internet technologies that track their driving efficiency or reduce their fuel costs. Insurance companies may also create more accurate premium pricing models and gain a better understanding of client behavior by utilizing data from UBI schemes. 

Although the decline in car registration numbers has significantly affected the auto insurance industry, the shift to driverless vehicles also presents new opportunities for insurers. As autonomous vehicles continue gaining traction in the United States, insurers must be ready for this transformation.

Autonomous Vehicle Company Growth Might Shift Insurance Responsibility

The use of autonomous vehicles is becoming more widespread. Self-driving cars’ potential to reduce instances of insurance fraud, accident claims, and policy premiums may spark a revolution. 

Advanced technologies, like radar and other sensors built to identify potential threats in the vehicle’s vicinity, make autonomous cars less likely to be involved in a crash than cars that rely solely on human capabilities and are subject to human error. 

In an autonomous vehicle, the car’s computer is designed to detect and respond to threats instantly and take the necessary precautions to prevent an accident. As long as this technology works correctly, it will considerably decrease the number of accidents brought on by human mistakes. 

With fewer accidents, there would be fewer auto insurance claims, too. 

A driverless car doesn’t just avoid human error in its own operation but can also detect threats posed by other drivers around the vehicle.  

Human error behind the wheel can take many forms, including: 

• Intoxication or impairment
• Sleepiness 
• Distraction 
• Speeding 
• Road rage

Autonomous cars avoid these human behaviors that contribute to car accidents. Because self-driving cars are continually scanning their surroundings for traffic signs and signals, autonomous cars are also more likely to recognize and follow local road laws than human drivers, who may fail to observe these signs. Autonomous vehicle users are less likely to violate traffic laws, reducing liability claims. A decrease in claims allows insurers to sustain lower auto policy premium rates. 

Insurance companies may also benefit from autonomous cars’ ability to help combat insurance fraud. Self-driving cars are already equipped with advanced cameras and sensors that allow them to constantly gather information about their environment and artificial intelligence systems capable of spotting questionable activities. Examining this data may help insurers identify fraud faster and avoid paying claims that aren’t legitimate.  

The shift toward self-driving cars may mean insurers lose some of the money they have traditionally gained from insurance policy premiums. Still, insurers have a great potential to save costs with autonomous vehicles.

Will Self-Driving Vehicles Affect Auto Insurance Liability?

One result of the development of autonomous cars is a rapid shift in liability for accidents from individual drivers to the vehicle itself and the companies behind self-driving cars.  

In addition to being accountable for mishaps or accidents, automakers and IT firms could also be held responsible for poor design. 

Self-driving cars don’t have human judgment on which to base their maneuvers. Instead, they make decisions based on something arguably better than human perception: computer-generated data and algorithms. If faulty algorithms, inaccurate data, or unreliable data analysis methods lead to accidents, the automakers and IT firms that created the self-driving car and its functions may be liable for claims resulting from the crash. 

As insurance firms gain more awareness of self-driving cars’ potential hazards and benefits, they could play a bigger part in determining liability for car accidents. 

The sensible adoption of self-driving vehicle technology will require laws that balance safeguarding people with enabling businesses to develop and create these new technologies safely and responsibly. 

Part of navigating this emerging industry is exploring the way responsibility for any collisions or legal matters will be perceived due to autonomous cars. The significant shift in this perception may extend beyond insurance policies. 

Why Get an Experienced Attorney to Handle a Car Accident Case Involving a Self-Driving Car?

Seeking legal advice is crucial in the era of autonomous vehicles. The evolving landscape of self-driving cars brings about complex legal and liability issues. 

Legal experts can help individuals and companies understand their rights and responsibilities in autonomous vehicle accidents. Only by consulting professional legal representation with experience in this rapidly changing area of law can one ensure that their legal rights are protected and feel confident that their interests are being represented in a legal claim. 

In Summary

As autonomous vehicles become more prevalent, the auto insurance industry is undergoing significant changes. To remain competitive and relevant, insurance companies must adapt to the changes brought about by self-driving cars, such as the potential for reduced accidents, lower fraud rates, and a shift in perceptions of liability for auto accidents. 

Contact Us at Buckman and Buckman

If you have questions or need assistance with insurance as it pertains to autonomous vehicles, please feel free to contact our team at Buckman and Buckman. We’re here to help you navigate the changing world of auto insurance.