Nathan Vanderlaan, MJLST Staffer
Autonomous vehicle technology is not new to the automotive industry. For the most part however, most of these technologies have been incorporated as back-up measures for when human error leads to poor driving. For instance, car manufactures have offered packages that incorporate features such as blind-spot monitoring, forward-collision warnings with automatic breaking, as well as lane-departure warnings and prevention. However, the recent push by companies like Google, Uber, Tesla, Ford and Volvo are making the possibility of fully autonomous vehicles a near-future reality.
Autonomous vehicles will arguably be the next greatest technology, that will be responsible for saving countless lives. According to alertdriving.com, over 90 percent of accidents are the result of human error. By taking human error out of the driving equation, The Atlantic estimates that the full implementation of automated cars could save up to 300,000 lives a decade in the United States alone. In a show of federal support, U.S. Transportation Secretary Anthony Foxx released an update in January 2016 to the National Highway Traffic Safety Administration’s (NHTSA) stance on Autonomous Vehicles, promulgating a set of 15 standards to be followed by car manufactures in developing such technologies. Further, in March 2016, the NHSTA promised $3.9 billion dollars in funding over 10 years to “support the development and adoption of safe vehicle automation.” As the world makes the push for fully autonomous vehicles, the insurance industry will have to respond to the changing nature of vehicular transportation.
One of the companies leading the innovative charge is Tesla. New Tesla models may now come equipped with an “autopilot” feature. This feature incorporates multiple external sensors that relay real-time data to a computer that navigates the vehicle in most highway situations. It allows the car to slow down when it encounters obstacles, as well as change lanes when necessary. Elon Musk, Tesla’s CEO estimates that the autopilot feature is able to reduce Tesla driver accidents by as much as 50 percent. Still, the system is not without issue. This past June, a user of the autopilot system was killed when his car collided with a tractor trailer that the car’s sensors failed to detect. Tesla quickly distributed a software operating system that he claims would have been able to detect the trailer. The accident has quickly prompted the discussion of how insurance claims and coverage will adapt to accidents in which the owners of a vehicle are no longer cause of such accidents.
Auto Insurance is a state regulated industry. Currently, there are two significant insurance models: no-fault concepts, and the tort system. While each state system has many differences, each model has the same over-arching structure. No-fault insurance models require the insurer to pay parties injured in an accident regardless of fault. Under the tort system, the insurer of the party who is responsible for the accident foots the bill. Under both systems however, the majority of insurance premium costs are derived from personal liability coverage. A significant portion of insurance coverage structure is premised on the notion that drivers cause accidents. But when the driver is taken out of the equation, the basic concept behind automotive insurance changes.
What seems to be the most logical response to the implementation of fully-autonomous vehicles is to hold the manufacture liable. Whenever a car crashes that is engaged in a self-driving feature, it can be presumed that the crash was caused by a manufacturing defect. The injured party would then instigate a products-liability action to recover for damages suffered during the accident. Yet this system ignores some important realities. One such reality is that manufactures will likely place the new cost on the consumer in the purchase price of the car. These costs could leave a car outside the average consumer’s price range, and could hinder the wide-spread implementation of a safer automotive alternative to human-driven cars. Even if manufactures don’t rely on consumers to cover the bill, the new system will likely require new forms of regulation to protect car manufactures from going under due to overwhelming judgments in the courts.
Perhaps a more effective method of insurance coverage has been proposed by RAND, a company that specializes in evaluating and suggesting how best to utilize new technologies. RAND has suggested that a universal no-fault system be implemented for autonomous vehicle owners. Under such a system, autonomous car drivers would still pay premiums, but such premiums would be significantly lower as accident rates decrease. It is likely that for this system to work, regulation would have to come from the federal level to insure the policy is followed universally in the United States. One such company that has begun a system mirroring this philosophy is Adrian Flux in Britain. This insurer offers a plan for drivers of semi-autonomous vehicles that is lower in price than traditional insurance plans. Adrian Flux has also announced that it would update its policies as both the liability debate and driverless technology evolves.
No matter the route chosen by regulators or insurance companies, the issue of autonomous car insurance likely won’t arise until 2020 when Volvo plans to place commercial, fully-autonomous vehicles on the market. Even still, it could be decades before a majority of vehicles on the street have such capabilities. This time will give regulators, insurers, and manufactures alike, adequate time to develop a system that will best propel our nation towards a safer, autonomous automotive society.