Self-Driving Carmakers to See Increased Liability for Crashes, Report

The rise of autonomous vehicles (AVs) is set to change how the auto insurance industry operates, according to a new MarketWatch report.

According to the report, despite the rapid advancements in AV design and technology, self-driving cars aren’t yet ready to be rolled out for mainstream use, with the report authors saying Americans are still “at least a decade” away from fully autonomous vehicles. 

Regardless of the anticipated slow pace of change, issues are already arising with how AVs are monitored and managed on the roads.

One problem is that innovation is outpacing the rate of industry regulation leaving, governing agencies struggling to update legislation around AV use and requirements. With several incidents involving self-driving cars already seen from companies including Tesla and Cruise, the need to have regulations in place around liability is increasingly pressing.

One of the biggest changes predicted in the report is a shift in liability from the driver to the automaker or software company behind the AV technology. 

“If a driverless car hits another vehicle or a pedestrian, determining who’s at fault gets complicated,” the report said. “The traditional model of car insurance will likely need to be adjusted to hold manufacturers or software developers liable for collisions caused by autonomous vehicles. 

Related:Study Reveals How Pedestrians React to Self-Driving Cars

“The industry will also need to develop coverage for newer risks, like those related to cybersecurity flaws and faulty GPS systems.”

Tilla Gode, head of risk and insurance at Waymo, said insurance for autonomous vehicles isn’t any different for human-driven cars. 

“Just like any commercial entity, we have insurance coverage in place that covers the Waymo driver over the course of the driving task,” said Gode. “Essentially, there’s a shift from human being drivers to the autonomous system being the driver — Waymo is the driver.”

In addition to the question of liability, the rise of driverless cars is also set to bump up repair costs and potentially decrease car ownership rates, as well as drastically change state insurance regulations and underwrite valuations.

“Even though proponents of autonomous vehicles believe the technology will ultimately reduce the number of car accidents, repair costs may increase,” the report said. “That’s because AVs have complex components that require automotive specialists to repair.” 

While the number of mechanics trained to work on AVs is expected to increase as the technology becomes more commonplace, there currently aren’t enough and this skills shortage is pushing up potential costs in the instance of a problem.

As AVs (and the technology used to power them) develop, the car insurance industry is set to change to meet evolving market requirements.

“Because there aren’t any fully autonomous, consumer-level vehicles on the market, the kind of coverage needed for AVs currently isn’t different from what human-driven cars need,” the report said. “As the industry develops, however, and automakers are able to build fully driverless vehicles, the car insurance industry will need to adapt. 

“Certain kinds of coverage, like comprehensive and collision insurance, will likely remain the same or similar, but liability coverage will be redefined. With new technology comes new kinds of risk, so AVs may bring about different policies that cover cybersecurity, artificial intelligence and GPS systems.”