The future of the automotive industry is on its way. Self-driving cars are slowly but surely becoming more and more prevalent on the road.
In fairness, it will be many years and decades until autonomous cars out-number cars that are still being driven by an actual person. Nevertheless, a future in which humans no longer need to drive their own car is close enough to envision.
Naturally, self-driving cars will bring about countless changes to the way we live our lives
There will also be a number of industries that are forever changed by self-driving automobiles. The car insurance industry is at the top of the list of industries that will be impacted. With the auto industry changing, the auto insurance industry will have to change along with it. New questions and concerns will be raised for car insurers. Companies that specialize in auto insurance will also have a variety of new situations it will have to address. Here is a look at the future of self-driving cars and insurance issues that may pop up as a result.
Driverless Car Insurance Premiums Could Drop
A drop in the cost of insurance premiums is one possible effect of autonomous cars. Presumably, the number of car accidents will be reduced with more self-driving cars. After all, that’s the primary purpose behind innovating self-driving cars; they’ll be safer than human drivers. If the number of car accidents ultimately decreases with more self-driving cars, the laws of supply and demand dictate that insurance premiums drop in price.
Obviously, this isn’t something that will happen overnight. Most predict it will be decades until self-driving cars out-number those driven by people. Even as autonomous cars slowly make up a larger percentage of cars on the road, there will be bugs that need to be worked out. It’s also possible for collisions to occur between cars with human drivers and self-driving cars. It’s worth noting that human drivers will have to adjust to sharing the road with computer-controlled vehicles.
The hope is that more self-driving cars will lead to fewer accidents
In fact, we may already be seeing advanced technology in vehicles reducing accident numbers. Advanced driver assistant systems have become more common in newer vehicles. Features like forward collision prevention and lane change alert technology are helping to reduce accidents. Insurance companies are also lowering premiums for cars that have these features. This is encouraging drivers to buy vehicles with added safety features.
Some are estimating as many as 40% of the vehicles on the road could have advanced driver assistant systems by 2025. If those vehicles are seeing drops in insurance premiums, it stands to reason that with even safer self-driving cars, insurance premiums will fall even more, potentially saving car owners a significant amount of money in insurance costs.
Self Driving Cars Insurance Companies Will Assume More Liability
The party assuming the most liability in an accident may be the most drastic potential change with self-driving automobiles. At the moment, drivers and vehicle owners assume the most liability. Current data also suggests that upwards of 94% of auto accidents are related to human error one way or another However, if there’s nobody that’s physically driving the car, who takes the blame? In all likelihood, the manufacturer of the self-driving vehicle would be the first party blamed if an autonomous car is involved in an accident.
Several automakers are already planning for this possibility. Tesla is extending an insurance program for people who have purchased a self-driving car. By doing this, they are accepting that they are liable for accidents involving self-driving automobiles. This represents a significant shift away from blaming human drivers, who may need less insurance coverage in the future. Meanwhile, manufacturers will be more liable and in need of self-driving cars insurance.
Of course, this issue is far from settled. As more and more autonomous cars make their way onto the road, the insurance issues involving self-driving cars will be worked out. There will likely be a whole host of issues settled through litigation before anything is settled from an insurance standpoint. But on the surface, companies may assume more liability than car owners.
There Could be Less Fraud with Driverless Car Insurance
On the surface, it’s possible that the issue of insurance fraud could go away completely with the help of driverless vehicles. As mentioned, more self-driving cars will presumably mean fewer accidents. Fewer accidents would mean fewer insurance claims. Ultimately, there will be fewer opportunities for people to concoct insurance fraud scams if there are fewer overall claims.
Advancements in automotive technology also mean insurers will have more information about accidents. Telematic and sensor data inside the car could potentially tell an insurer everything they need to know about the accident. There would be fewer occasions of he said vs she said. That’s not to say people wouldn’t try to beat the system. However, incidents of fraud would be far more difficult to pull off. This could lead to fewer attempts of auto insurance fraud, which would be good news for companies and customers alike.
Self Driving Cars Could Lead to Reduction or Drop in Insurance Coverage
With self-driving cars, insurance is bound to change. In fact, there are many who believe that self-driving cars pose a threat to the long-term sustainability of the auto insurance industry. With safer, human-driven vehicles and driverless vehicles, more people will only look to carry the bare minimum of car insurance policies. The general public will have less trepidation about getting into an accident if technology helps make roads safer. Eventually, personal accident insurance could be viewed as unnecessary. Obviously, this would have a significant impact on the revenue generated by auto insurance companies.
Of course, having car insurance is mandatory throughout the United States and most of Canada. Any person who drives without having a self-driving vehicle do the work for them must be insured. However, if roads increase in safety as expected, it’s possible that some states will back off insurance being mandatory for drivers. At that point, drivers would be able to make up their own mind about being covered. That would deprive insurance companies of potential customers.
Ultimately, it might be up to insurance companies to adapt to these kinds of changes. They would either need to provide other services to entice drivers to be insured or lower their premium rates. Either way, an increase in the number of driverless cars poses a significant challenge for insurers. The good news is that they will have time to plan for the future. It may be 10 or 15 years until self-driving cars are prevalent enough to create serious changes in the insurance industry. However, at some point, the business model for insurers may need to change.
Companies May Specialize in Driverless Car Insurance
While existing insurance companies will have to adjust to driverless cars, it’s possible that new companies will pop up that focus specifically on self-driving vehicles. In fact, companies like that have already started to form. Current insurance companies don’t know enough about self-driving cars to price rates in a fair and accurate way. They simply don’t have enough information about self-driving cars.
However, newer companies could focus on the data and analytics that relate to the safety of self-driving cars. This would allow them to gain an in-depth understanding of the safety of these vehicles. In turn, they could offer fair and affordable insurance policies to both the manufacturers of self-driving cars and the people who buy them. Remember, even if there is no driver, there will be passengers in a car. Those passengers may very well need insurance in the event of an accident. This could open the door for a new type of insurance company that specializes in self-driving vehicles.