It might seem like the plot of a sci-fi book, but soon, self-driving could become a reality. Today, self-driving technology is already being used in vehicles to assist drivers. In fact, some tech experts are so confident about self-driving vehicles that they believe human-operated cars could one day be banned. However, this new reality presents some challenges for the insurance industry. The legal insurance sector might soon have to make major changes in how it operates. This is especially in regards to car insurance. Here is what the experts think might happen in the future:
Automakers will be Liable
Today, you will be forced to assume liability for most accidents. However, if an accident occurs in the future, where cars are self-driving, the manufacturer might be held liable. After all, it will essentially be them behind the wheel. In fact, there is already a precedent for this.
While self-driving cars are less likely to cause accidents, companies such as Volvo, Mercedes-Benz, and Google accept liability when their self-driving system causes an accident. Tesla even offers an insurance program for those who buy a Tesla. It shows that these companies have a lot of confidence in their technology. Current data shows that human error is the cause of about 94% of all accidents. However, experts do not expect things to go smoothly. For one, the technology could improve further. As a result, the makers of such cars are able to determine whom between the driver and vehicle was in charge at the time of the accident.
Insurance Premiums Will Drop
Today, one of the major issues that might cause you to buy legal insurance cover is so that they can litigate issues such as car accidents. However, premiums for self-driving cars could be quite low in the future. This might be issues such as self-driving cars and drivers mix on roads. However, as more self-driving cars enter the roads, insurers could start offering lower premiums for those that embrace the technology. With lower accidents rates, this could be great for humanity. In the US alone, about 37,000 people die in car accidents annually.
However, it might not take self-driving cars for accident rates and premium rates to start falling. Advanced Driver Assistance Systems are already showing huge potential to lower accidents. ADAS is a common technology that is making prices to fall. It is estimated that by 2025, about 40% of all cars will have some kind of ADAS installed. Most insurers already offer you a discount if your car has this system in place.
Car Insurers May See Falling Profits
At some point in the future, drivers will realize that they do not really need to pay for more than a basic cover for their cars. This could be a blow for insurers, who might have to come up with new business models if they wish to survive. In fact, if the accident rate drops significantly, mandatory insurance cover might even be dropped in some states.
Whether you believe human drivers could be banned from roads or not, it is quite clear that new technology will have a huge impact on the insurance industry as well as on our road.