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Autonomous Car Insurance

A completely autonomous car, also referred to as a driverless, self-driving, or robotic car, operates with artificial intelligence and does not require a human driver. The car uses GPS, radar, laser lights and motion sensors to drive and is programmed to follow the road rules, take in the surroundings and adjust quickly to conditions to keep passengers and the body of the car safe.

Source: Wikimedia, Comenius11

Currently, the underlying risk factor at the heart of driving is that at the end of the day, a car is a very fast, very powerful metal box controlled by a sole person susceptible to human error. However, the promise of self-driving and automated cars is that we can remove that human error, and therefore make cars and roads dramatically safer.

This extra level of safety isn’t just a big step for consumers in terms of reducing the road toll, it’s also expected to change the way we buy insurance. The Stevens Institute of Technology estimates that 23 million autonomous cars will be on US roads by 2035, and that this could see insurance premiums for customers drop by 12.5%. However, it’s not all bad news for insurance companies – they’re still expected to gain significant revenue due to the new products they’ll be able to offer.

Under the current system, a traffic collision would usually indicate some sort of human error, and therefore that a person is at fault. However, when cars are driving themselves, the difference between a collision and a near miss comes down to the decisions made by the car, not the driver. This reliance on technology has raised questions around who is liable for the damage when an incident occurs. Volvo, a leading developer of self-driving cars, has stated that they will accept full liability whenever their cars are in self-driving mode. Other businesses have taken different approaches; Tesla has started selling insurance as part of the car’s purchase in Asia, with an aim to reach a stage where insurance and maintenance are included with the selling price alongside the car itself. Ford are yet to announce their liability strategy.

This variation in thinking about insurance is uncharted territory for the motor vehicle industry, and is one of the major factors currently holding back the widespread roll-out of autonomous cars. Before we can use self-driving technology effectively, the car industry, the legal system and, by extension, greater society, will have to decide who is responsible for autonomous cars driving safely and who is liable when a collision occurs.

The Glenferrie Times will continue to look at the range of issues surrounding the rollout of autonomous cars and likely impacts on our community. Our opening article to the series can be found here.

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