It’s not just transportation the mobility revolution is upending. The disruption is starting to impact a wide variety of industries. That includes insurance. A critical question is emerging — so far without a good answer — of who is responsible if a self-driving vehicle becomes involved in an accident?
This is likely to be the first step in a whole new journey for auto insurance and liability as we know it.
Improved safety is expected to be one of the major benefits of autonomous cars and trucks. But inevitably, mishaps will happen, especially in the early days as the systems are being fine tuned and then tuned again. And as accidents happen, sorting out who should pay for the damage will not be as simple as it is today.
Traditionally, liability is linked to ownership or a contractual operating agreement like a lease. The industry expects the whole notion of liability to change as ownership shifts from individuals to service providers (automakers, startups like Uber and Lyft).
The current automobile insurance model grew up with the owner-operated automobile, and typically assigns responsibility for the cost of an accident based on who was at fault. Under Michigan’s no-fault system, that model varies in that motorists and their insurance companies cover the cost of repairing their own cars. Only 12 states have no-fault laws.
Still, the system is built on the idea that most accidents are caused by operator error, and blame can be clearly assigned.
That changes radically with autonomous vehicles. While the automobile may still be privately owned, it will not generally be operated by the owner, but rather by a computer/satellite network that moves the vehicle about without much involvement of its passengers.
So should an accident occur, what liability should the owner assume? And if the accident results in death or serious injury, who gets taken to court — the owner, or the operator of the network that was guiding the car?
While automakers insist the current insurance system can be adapted to the autonomous car era, that seems optimistic.
The consumer group Save Autonomous Vehicle Campaign (SAVe) wants automakers to take responsibility for crashes involving the vehicles they are testing, and perhaps those they will be marketing to consumers later.
Certainly, automakers and the other companies such as Apple and Google that are jumping into the segment should assume all liability during the testing period. Beyond that, when self-driving cars and trucks become the norm, new insurance procedures will be needed.
The interim will also pose challenges, with different levels of autonomous vehicles on the road along with traditional cars.
Michigan adopted a series of laws last year giving automakers much more freedom to test and operate self-driving vehicles on public roadways. Included in that package were measures addressing liability. The state will consider the computer systems operating the vehicles autonomously without a human at the wheel as the operator, and thus assume liability.
That seems good guidance for the future.
Owners of autonomous vehicles may still need to purchase insurance against theft or damage that occurs when the car or truck is sitting idle, or during those times when the vehicle is not in the autonomous mode.
But liability policies should become obsolete. Operators of the autonomous systems will be responsible for keeping the vehicles apart while they’re on the roads, and if they fail, they should bear the damage costs.
Michigan’s Council on Future Mobility, created in December, has the insurance issue on its to-do list. It should start with the view that autonomous driving will change everything, including insurance and liability.
The goal should be coming up with an entirely new insurance model for this new era.