In the past decade, car manufacturers like Tesla, and Volkswagen and even non-automaking technology companies like Apple embarked on a quest to revolutionize the self-driving car.
Self-driving cars are vehicles that are controlled by artificial intelligence and operate with limited human supervision. There's no telling yet when traditional driving will be replaced by fully-autonomous vehicles. However, the groundwork has been laid, and we have some of the fundamental features already integrated into available cars, such as: front and rear crash prevention systems, ultrasound sensors, blind-spot detection and locking-out controls.
As a driver, you might wonder how self-driving cars may affect the insurance industry. How are car insurance providers preparing for the future? And how might that affect you as a customer?
Will car companies be liable for accidents?
As driverless cars become more prevalent, there is an increasing discussion about who should be held liable in the event of an accident. Some argue that the liability should fall on the shoulders of the vehicle manufacturers, as they are directly involved in the creation of vehicle technology. Others believe that the drivers should still be held responsible, even if they are not in control of the car.
This question was sparked recently when a Tesla Model S crashed into a parked fire truck in Los Angeles. The driver claimed that the vehicle was in Autopilot mode at the time of the accident, and Tesla has since clarified that its Autopilot feature is not meant to be used without supervision. This incident highlights the need for more straightforward liability guidelines in autonomous vehicle accidents.
Will technology make insurance claims more accurate?
While self-driving cars may muddy the waters on liability, they might ultimately make things easier for insurance providers. With the highly sophisticated technology integrated, insurers will now have new and more reliable means of monitoring and recording vehicle activities. This can help eliminate fraudulent claims. Accident claimants will no longer be able to inflate their claims or lie about the cause of the accident, reducing the amount that insurers have to pay out on fraudulent claims and eliminating 'crash-for-cash' scams. Even in situations without fraud, sometimes it's unclear who is at fault for an accident. Monitoring technology in both vehciles can help make assessments without bias.
Will it change what you pay?
With the onset of self-driving cars, insurers will have to update their pricing metrics. Currently, the amount you pay is based on a number of rating factors including where you live, who you are and your driving history. Of course, you can read more about how different rating factors impact your rates in our State of Insurance Report.
As the number of self-driving cars increases and in places where there are more on the road, we may see rating factors and how they are weighed change. For example, rates may be focused less on your personal driving history and more heavily based on different factors, such as the car's likelihood of getting into an accident and the cost of repairing it. Auto manufacturers will also likely include insurance in the price of their vehicles, which could change how people obtain insurance.
Will self-driving cars lead to new risks?
As driverless cars become more prevalent, their risks and vulnerabilities will also increase. Of course, machines are not infallible, so there is always the possibility of malfunction leading to an accident. Cybercrime and hacking attempts could target these vehicles to access sensitive data or disable them entirely. To mitigate these risks, manufacturers must strengthen their insurance policies and ensure they are effective against new perils. Also, self-driving cars must be equipped with robust security measures to protect against these threats.
What does this mean for you as a consumer?
Having or in other cases, traveling via a self-driving car means that:
You'll obtain a spotless driving record
According to McKinsey, self-driving cars could reduce the number of road accidents by 90%! This means that self-driving cars can potentially make your driving record look spotless. With a diminished possibility of human error, many of the accidents that happen on the roads every day could be prevented.
You'll be able to relax and unwind
Self-driving cars will one day help make it possible for you to get where you need to go without worrying about driving yourself. This would free up a lot of time and allow you to relax or do other things while on the road.
You'll be spending more to maintain your car
The more sophisticated technology is, the more you will be paying for the damage due to the expensiveness of each car component. In this way, self-driving cars will cost more to fix or repair in the event of an accident when compared to conventional vehicles.
You'll be paying less on car premiums
One of the main benefits of autonomous vehicles is that they have the potential to reduce the number of accidents on our roads significantly. 68% of all accidents in the United Kingdom are attributed to loss of focus, and about 90% are attributed to driver error in the United States. The technology employed in self-driving cars helps reduce human-based mistakes, accidents, and associated risks to the minimum. Without the possibility of human error, autonomous technology has the potential to make our roads much safer. This could significantly impact car insurance rates and premiums, with drivers of autonomous vehicles potentially paying less than those who choose to stick with human-controlled vehicles.
As long as the technology within the auto industry keeps improving and getting optimized with continuous testing, it won't matter much whether you embrace the self-driving possibilities now or not. Regardless, know that they might be here to stay for good. Of course, self-driven cars will change how we drive, but it's too soon to determine the extent of the changes.
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