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7 Insurance Issues With Your Self-Driving Car
Junko Yoshida Junko Yoshida
7/28/2014 01:50 PM EDT  

MADISON, Wis. — As we gird for the inevitability of fully autonomous cars sometime between 2020 and 2035, we occasionally hear the small, still voices of technologists and industry analysts discussing the significant reduction in automotive insurance rates (if you drive a self-driving car, that is) and how it will add momentum to autonomy.

In theory, the assumption doesn't seem outrageous. The prevailing consensus is that the technology is more likely to reduce human error than to mimic or exacerbate it.

But having never talked to anyone in the insurance industry on this particular topic, I wasn't sure if insurers are actually on the same page with the engineers who've been advocating the new technology.

By looking at self-driving cars from insurers' point of views, I'd figured we might gain some perspectives on how self-driving cars might be perceived by society at large.

This inquiry introduces certain issues with self-driving cars that I'd never considered. They represent potential roadblocks to the broader adoption of the new technology. But there are also a few premises the insurance industry seems to have already embraced.

1. ADAS features will reduce the accident rate
According to an Insurance Information Institute (I.I.I.)'s report entitled "Self-Driving Cars and Insurance," issued earlier this month, the insurance industry appears to agree on the basic premise that self-driving cars will reduce the accident rate.

In the report, I.I.I., a non-profit, communications organization funded by the insurance industry, wrote. "Most accidents are caused by human error so if this factor can be minimized by taking control of the moving vehicle away from the driver, the accident rate should tumble." Quoting statistics from the Institute for Highway Safety (IIHS) and Highway Loss Data Institute (HLDI), the report concluded that the data "already show a reduction in property damage liability and collision claims for cars equipped with forward-collision warning systems, especially those with automatic braking."

But when it gets to specifics on rates, insurance companies remain on the fence.

I asked if my auto insurance will get cheaper if my next car has ADAS features. Michael Barry, vice president of media relations at I.I.I., said, "The short answer: It is too early to know. Driverless vehicles have not been around long enough for auto insurers to make an assessment as to whether they'll automatically result in lower auto insurance rates."

2. Expect shifts in blame
Obviously, as crash avoidance technology gradually becomes standard equipment, insurers are hoping to better determine the extent to which these various components reduce the frequency and cost of accidents.

But the I.I.I. report reveals a bigger interest in finding out the following: In the event that accidents involve self-driving cars, will claimants blame the manufacturer or suppliers for what went wrong rather than their own behavior?

I.I.I.'s Barry, while cautioning that it would take time to sort these things out, told me, "It is conceivable that lawsuits could be filed against the manufacturer of a defective driverless car, or the company which installed the car's computer software."

3. Manufacturers to retain "all liability"
As cars become increasingly automated, the onus is likely to be on the manufacturer to prove it was not responsible for what happened in a crash.

In fact, look no further than what the Association of California Insurance Companies is advocating. The group is asking "for changes clarifying that the autonomous vehicle's manufacturer retain all liability for damage, losses or injuries caused by the operation of these vehicles as required by the enabling law (SB 1298)," according to Property Casualty Insurers Association of America.

The trend isn't limited to California. "Other states have considered such proposals," said I.I.I.

Next page: Rise on no-fault auto insurance?


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