Auto Insurance and Self-Driving Cars
The prospect of autonomous cars taking over the nation’s highways may bring joy to the hearts of those individuals for whom driving any sort of vehicle constitutes one of life’s more onerous tasks. Imagine being able to update social media, finish that term paper or simply surf the internet at leisure while your self-driving car magically transports you to wherever you want to be. No need to steer or hit the brakes. Just program the computer, start the engines and go.
Yes, to drivers it may sound almost too good to be true. To insurers, on the other hand, things might not be all that rosy. By the year 2025, it is entirely possible that 40 percent of vehicles on the road will be moving at least partially under their own direction with little to no human involvement, and only some of them will be passenger cars. Buses, trucks and taxis will also join the party, and for the insurance industry, some vast and rapid changes could soon be in the works.
How Insurers Will Handle the Driverless-Car Disruption
Since artificial intelligence rests behind the forthcoming changes, insurance agencies will need to adopt a technological frame of reference while at the same time assuming a more creative and flexible attitude. As things currently stand, most vehicular accidents result from human error. The expectation is that self-driving vehicles will eliminate as many as 45 percent of these types of collision. That is, if the technology truly delivers all that it promises.
On that point, the jury is still out. While it goes without saying that autonomous vehicles cannot possibly be prone to human error, that doesn’t make them error-free. In fact, their capacity for causing accidents may be greater than their manufacturers had originally imagined.
In testing, nearly every version of the autonomous car has been the subject of at least one crash, and experts believe that these mishaps occur for several reasons. For one thing, the self-driving cars lack the ability to think outside the box. They innocently expect other vehicles to recognize such simple concepts as yielding the right of way, and they are unable to anticipate the common tendency of human drivers everywhere to flout the rules of the road. In addition, flesh-and-blood vehicle operators have shown a similar inability to predict what the self-driving car is trying to accomplish or intends to do.
The New Insurance Business Model
Because human error is expected to play a much smaller role in future accidents, the private driver’s insurance premiums could eventually plummet by up to 60 percent by the year 2035. This change will, of course, happen gradually as insurers adjust to the new reality and autonomous cars become more adept at proving their worth.
In the meantime, premium prices are likely to experience a certain volatility. Part of the difficulty revolves around the fact that due to the newness of the driverless scene, insurers have no reliable historical statistics on which to base their projections. This will force them to analyze and react to data as it accumulates in real time. The picture could be ever-changing.
A Brave New Concept of Fault
Is a driver really a driver if his car is driving itself? More to the point, would that individual be responsible if the car behind whose wheel he sits should broadside another vehicle while he sat happily eating his lunch or reading War and Peace? The advent of the autonomous car could eventually move the insurance model away from individual coverage and toward heavier indemnification for the manufacturers of these vehicles and their software. It could also cause confusion concerning assignment of blame, and the superior financial position of the corporate interests involved could lead to a rise in the numbers of lawsuits.
There is also the distinct possibility of fault reverting to the person seated behind the wheel. The courts may find this individual responsible for having neglected to steer out of danger or hit the brakes when the vehicle itself failed to respond with sufficient intelligence. In the end, those who prefer to leave the driving to their automobiles could find themselves in need of more extensive insurance coverage than they had originally imagined.
At All Kinds of Insurance, we take these matters seriously. Our expert agents are dedicated to staying on top of the situation. We are aware that insurers have already begun to weigh the need for balancing coverage between manufacturer and vehicle operator, and we also realize that the advent of a driverless world is far closer than many people understand. If you have any questions about the potentially volatile automobile insurance landscape of the near future, please do not hesitate to give us a call.