As you may have noticed, there is a lot of news coming out lately about driverless cars – Google is one of the main players in the field, but Carnegie Mellon University made a big splash locally and nationally when it unveiled a very successful test-drive in the Cranberry area nearly two years ago. A lot has been written in the last couple years about the various pros & cons of driverless cars, so I won’t rehash them here – a simple Google search will reveal just about anything you’ve ever wanted to know about the future of driverless vehicles.
However, as an insurance agent, one of the first things that comes to mind whenever the topic comes up is, how will the insurance policy, and the liability coverage in particular, function when it comes to insuring driverless vehicles? This is not an easy question to answer, as there are many facets to consider, and much of it is based on speculation because the technology has not put forth a viable “ready for the public” option yet.
There are several legal considerations that, for the most part, I will set aside for now – primarily for the sake of expediency. One of the big issues at hand is that, generally, each state has autonomy over how insurance laws & coverages are mandated. I will address issues as broadly as possible, but the situation is still largely theoretical and developing as the technology progresses.
From an insurance standpoint, one of the largest liability concerns is the question of who is at fault (“liable”) when a driverless car is involved in an accident – is it the “driver” of the vehicle? The engineering firm that put together the software operating the vehicle? The manufacturer of the vehicle? All of the above? This is not an easy question to address, and seems to generate more questions than answers. Was there an error in the software? Was the driver able to manually override the vehicle and didn’t? Did the steering system or brakes fail to receive or comprehend the instructions the software passed along? Some of these questions will sort themselves out as the technology becomes more “concrete” and less speculative. But the truth is, I fear, legal liability concerns will not actually be resolved until after the rubber hits the road and accidents occur.
Another concern along those lines is who is responsible for damages to the driverless car itself if it is responsible for an accident in which it gets damaged? As above, should the software design firm pay for your damages? The car company? Are you responsible, as the owner of the vehicle?
A bit more disconcerting – what if your vehicle’s software is hacked? If the vehicle is dependent upon mobile maps & directions to get from point A to point B, what if mobile/cellular service is lost? How will the vehicles navigate, and in particular, how will it respond to the ever-changing conditions of roads and construction, closures, traffic, etc?
Lloyd’s of London published a market-watch article (along with its far more lengthy corporate report) about some of these very issues. While the article isn’t conclusive, it does provide some key insights into considerations and factors at hand: “liability will be a key issue because autonomous and unmanned vehicles involve the transfer of control from direct human input to automated or remote control. ‘In many cases the technology is there to create fully autonomous vehicles, but the legal and regulatory environment needs to be developed further, and public trust will also need to be fostered,’ says Maran.”
One thought I see being repeated consistently is that, ultimately, the increased safety offered by autonomous vehicles will rapidly outweigh the legal and insurance liability concerns: “Many of the routine claims that currently drive the cost of motor insurance will reduce or almost disappear entirely, explains Powell. The resulting decreased exposure for insurers would probably require underwriters to change the design and pricing of motor insurance products, he says.”
At the end of the day, because the technology is a relatively long way off, the “problems” of insuring driverless cars still bring up more questions than answers. Regardless of the characteristics of the final product, the technology is coming, and the insurance companies that are able to quickly analyze and adapt to the new risks will be a huge step ahead of their competitors.
Some additional resources, reading, and even some videos to watch:
CNET / YouTube – great review of pros & cons of self-driving cars