Will Self-Driving Cars Destroy the Auto Insurance Industry? (siliconvalley.com)

An anonymous reader quotes an article from the Bay Area News Group: Imagine your fully autonomous self-driving car totals a minivan. Who pays for the damages? "There wouldn't be any liability on you, because you're just like a passenger in a taxi," says Santa Clara University law professor Robert Peterson. Instead, the manufacturer of your car or its software would probably be on the hook... Virtually everything around car insurance is expected to change, from who owns the vehicles to who must carry insurance to who -- or what -- is held responsible for causing damage, injuries and death in an accident." Ironically, if you're only driving a semi-autonomous car, "you could end up in court fighting to prove the car did wrong, not you," according to the article. Will human drivers be considered a liability -- by insurers, and even by car owners? The article notes that Google is already testing a car with no user-controlled brake pedal or steering wheel. Of course, one consumer analyst warns the newspaper that "hackers will remain a risk, necessitating insurance coverage for hostile takeover of automated systems..."

Comments

Insurance

[fluffernutter]

If I have an automated car and I had to have (driving, expensive) insurance for the times I switched it to manual then I wouldn't want a car that could be switched to manual. If companies can confidently stand behind their products, then it isn't a problem for them to accept responsibility because they won't be causing problems. Therefore, I would expect AI insurance to be around the same price as for a $20-30K piece of property that may get ruined due to reasons beyond the owner's control. Judging by the my property insurance cost, that should be around $30 a year.

Re:Maybe

[fustakrakich]

The whole concept of car "ownership" will have to change. Autonomous vehicles will have to be operated more like a public on-demand service, like an elevator. Push a button on your phone, a vehicle shows up at the door, and off you go, the cost deducted from your card. It will have to be profitable to operate but the market must be open to real competition, even with state run operations. Otherwise service will be too selective.

No

[rsilvergun]

because owning your own car will still require it and everybody wants to own their own car. If fewer people can afford cars they'll just raise the rates, because it's a law.

But socialized medicine might. I'm old enough to remember the debates around mandatory insurance and they were all based about trotting out poor little boys and girls that got their shit wrecked in a wreck and how they couldn't afford the doctors. Give us socialized medicine and a proper safety net and it pretty much makes car insurance obsolete.

Which is yet another reason we'll never got it.

Stahp

[PopeRatzo]

Self-driving cars are utter vaporware. They are the automotive equivalent of Duke Nukem forever.

Yes, there will be expensive driving aids on cars, but no one here will see ubiquitous cars that drive themselves.

The first truly self-driving cars will probably be flying cars. Which means never. So can we please stop with the self-driving cars horseshit?

The insurance industry will adapt

[timholman]

"There wouldn't be any liability on you, because you're just like a passenger in a taxi," says Santa Clara University law professor Robert Peterson.

Wow, that's good to know. That means I don't need home insurance either, because I'm not operating the house; I'm just living in it like a resident in a hotel. Clearly the person who built the house will be liable. Oh, wait ....

Could we please put aside these laughable "self-driving cars will be sued out of existence" arguments once and for all? Liability insurance can be purchased to cover situations in which you do not directly control events. For example:

I own a house, and I pay insurance to (among other things) protect myself if I'm sued by people who may injure themselves on my property, even if I'm not at home. My insurance company is perfectly happy to sell me liability insurance, even for property I don't live in.

It will be the same with self-driving cars. If you own one, you'll be able to buy liability insurance for it, just as you would for any other vehicle. The insurance industry will adapt perfectly well.

There will ALWAYS be a need....

[Izuzan]

For cars that can be driven by a human.
Farmers for example, how does a self driving car manage to get off road and find its way to where they need to go. Transport trucks, backing a 40ft trailer to a bay door. People who tow boats or camper trailers or any traler for that matter.

Ownership is doubtful

[petes_PoV]

With a self-driving car, there are many things that can go wrong and cause an accident apart from the driver.

Insufficient maintenance being one.
So I reckon that either accidents will involve a great deal of argument between the little guy (who bought the SDC) and the big guy (manufacturer) with the big guy making all sorts of accusations and demanding proof that every last servicing requirement had been carried out by an approved service agent. Or the car will remain the property of the manufacturer (or fleet owner) and it will be leased to the notional user. Thus removing the car's passenger from liability. But leaving them with a large monthly bill for ensuring the vehicle is kept mechanically perfect.

Either that or he's wrong

[PCM2]

Either all of that, or he's wrong and a legal standard will be set where it is the owner of the equipment who is liable, whether it is operating in autonomous mode or not. If that's the case, nothing much will change.

I'm still half of the mind that autonomous cars are already in a Segway type situation, where you have all these wonks predicting that they're poised to transform all of society etc. but the logic just doesn't hold up:

A.) Americans like driving.
B.) Car manufacturers market various car models with features that cater to the fact that Americans like driving, because it's profitable.

...and the biggie...

C.) Does anyone really believe autonomous cars will be sold to consumers without the ability for a human driver to take over in emergency situations? But if the autonomous mode can be disabled, then 1.) You will still need a drivers license to own an autonomous car, so no increase in convenience and no benefit to the disabled; 2.) The implication is that as the "driver," you must be alert to the possibility of emergency situations at all times, even in autonomous mode. This means you will have to pay attention as if you were actually operating the vehicle, which negates a lot of the value of a self-driving car. What's more, various cognitive processes will probably cause people to think they're in an emergency when they're not, causing people to turn off autonomous mode way more often than necessary, making the road much more unpredictable and (ironically) unsafe.

So will autonomous cars be a thing? Almost certainly. In fact, it seems they already exist. Will private ownership of autonomous cars by US consumers ever be a thing? Don't bet on it.

"Fine," you say. "Autonomous cars will be like fleets of robot taxis that you hire." But if most of the drivers on the road are still driving their own cars, then that negates a lot of the safety and environmental claims. Autonomous cars won't be able to optimize coordinated driving for fuel efficiency, for example, and all the marketing and all the newspaper headlines will be around how well they cope with unpredictable human driver behavior.

And if it goes the other way and you start seeing autonomous cars bumper-to-bumper like taxis in NYC, how long will it be before someone asks whether these robot taxi companies are paying their share of the taxes used to pave the roads, install traffic lights, etc.? And then there's still the issue of who's liable if a blind guy gets in an accident in a robot taxi. Or if blind guys aren't allowed to hire robot taxis, who goes to court over the Americans With Disabilities Act?

Don't worry, though. Once Google evolves into a full-blown defense contractor, it will still be able to sell autonomous vehicles to the Pentagon.

Re:Self-driving will not "destroy" auto insurance

[dgatwood]

What you are saying will only be true if states pass laws requiring insurance premiums to be directly tied to payouts. As far as I know, there currently are no such laws and there is nothing requiring insurance companies to lower their rates if there are fewer payouts.

Many car insurance companies are mutual insurance companies, which makes them nonprofits. So to that extent, yes, there are laws requiring them to either lower their rates or pay money back to their customers if there are fewer payouts. And the existence of State Farm and other mutual insurance companies ensures that any for-profit insurers won't be able to keep their rates arbitrarily high for very long.

The thing is, most folks will probably still want comprehensive car insurance for other things—damage from hail, trees falling on your car, accidents beyond even the computer's control, vandalism, theft, etc. It will just be a lot cheaper because you won't have to pay the liability portions.