What Will Driverless Cars Mean for Auto Insurance?
Driverless cars are immensely popular in some parts of the country and the phenomenon is only going to grow as more companies begin to make the cars and more states pass laws allowing their use. At this time, 9 states have passed legislation allowing the use of autonomous cars. Some of the states only allow them to be used for testing purposes and most states require a passenger to be present in the driver’s seat. Because of the newness of the technology, some state legislatures are cautious to enact legislation at this point in time. This approach by the states can mean one of two things: First, it may mean most states are correct and the use of driverless cars is still in its infancy. It could also mean that a majority of the states are not being proactive. The states who are not forward thinking may be stuck passing legislation quickly as a means to catch up with changing technology. When this technology does become more commonplace there is one part of the auto industry that will be impacted very much. That area is the insurance industry. Three main ways in which the auto and insurance industry will have to deal with this new technology is through regulation, liability insurance and repair costs.
The Insurance industry is regulated by the states individually. Each state has its own set of rules and regulations for all types of insurance. Some states are making proactive moves to prepare for the future of the auto industry and that future includes self-driving cars. There are two main ways states go about regulating auto liability. There is a no-fault and a tort system of dealing with the liability related to auto accidents. In a no-fault system, insurers pay the injured party regardless of fault. In a state who has a tort system, the liability is based on the legal system within that state. States are going to have to change in order to prepare for autonomous cars. Nine states have passed some legislation, but most of the legislation allows driving of autonomous cars for testing purposes only. Many people within the industry see a future where car manufacturers accept a larger portion of the liability for damage and injuries Because of this liability being forced onto the manufacturers, it may cause the federal government to become more involved in the regulations of the market. The federal government becoming more involved may actually eliminate some of the costs to the insurers because there may be less costs to comply with one set of federal rules as opposed to 50 different set of rules throughout the states.
As automobiles become more automated, auto manufacturers must take on more of the liability for accidents that occur. This goes for all types of technology, including driverless cars. More pressure is being put on the manufacturer to prove it is not responsible for what happened in the event of a crash. The issue of liability is going to have to change in order to encourage automakers to continue to manufacture autonomous cars. If manufacturers have to take on a majority of the liability than it will cause the fewer manufacturers to decide to enter the market. This will drive the price of the cars up because of a lack of competition.
While the number and severity of accidents on the roads is expected to drop as more technology is incorporated into vehicles, the cost of replacing damaged parts is likely to increase. Because of the complexity of the components used all over the vehicle the price to repair cars involved in an accident will continue to increase. It is not clear yet whether the lower volume of crashes will offset the cost to repair vehicles because of the more expensive parts. If the industry can find a happy medium, in the future it may help businesses when they look for commercial auto insurance quotes.
Mitchell Sharp is a Marketing Associate for Generalliabilityshop.com. Mitchell has extensive knowledge of workers’ compensation and cyber liability. His passion is in using his knowledge of commercial insurance, social media and content marketing to benefit the small business community.Tags: auto insurance, commercial insurance, Driverless Cars, Insurance