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Global technology companies and automobile manufacturers have made massive investments in building out their autonomous driving capabilities. GM's Cruise, Alphabet's Waymo and self-driving car divisions at Uber and Lyft are just a few organizations seeking to scale adoption of autonomous vehicles.
It's impossible to say precisely how self-driving vehicles will affect our day-to-day lives, as they are still relatively rare on the roadways. But a change is coming to the automotive industry, and insurance companies (and consumers) will need to adapt as autonomous vehicles become commonplace.
Insurance costs could be built into the price of a car
As early as 2015, Volvo announced that it would assume full liability for an accident caused by one of its vehicles if it were equipped with Volvo's self-driving software and was in fully autonomous mode at the time of the accident.
This assertion has led some to expect that all car manufacturers would begin to assume liability for such incidents. However, a look at the numbers complicates the assumption that carmakers could broadly assume liability for all vehicles.
If manufacturers were to accept liability for their autonomous cars, the ability to purchase one could impact consumers. Even if the car average cost of insurance was cut in half, that amount could still add $10,000–$15,000 to the price of a new vehicle.
Personal auto insurance will endure
There have not been any laws enacted on the regulation of product liability insurance, yet. While health insurance policies may reimburse you for the medical costs incurred by a car accident, they're unlikely to cover damages paid for pain and suffering or lost wages, which many current auto insurance policies insure.
Car owners will likely need to continue purchasing comprehensive insurance to protect themselves from these losses.
You may need to increase your auto insurance limits
As manufacturers continue to add more sophisticated technology to their vehicles, the cost of minor collisions has risen. These increases implicate the need for higher insurance premiums and higher policy limits.
Drivers today are at little risk of colliding with an autonomous vehicle. However, if you caused a collision with one, or any other high-tech vehicle, you would likely incur a substantial insurance claim. And as companies continue to put self-driving cars on the road, the number of these incidents will continue to increase.
In California, as of June 2019, there were 61 autonomous vehicle testing permit holders. But while California enforces a mandatory minimum level of liability insurance for all drivers, the minimum required property damage limit is only $5,000. This amount would likely fall short of the total costs incurred by a collision with a high-tech vehicle.
As manufacturers continue to add advanced technology to vehicles, car owners in all states will need to consider purchasing more than their state's minimum required auto insurance to protect themselves from the costs of an accident.
As the costs of these claims rise, legislatures will need to increase the minimum level of insurance required by each driver.
The number of vehicles equipped with self-driving technology increases every day. Manufacturers and drivers alike should pay careful attention to how insurance companies and their regulators respond to the questions posed by autonomous driving technology.
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- While technology provides new, convenient solutions, it can also create life-threatening problems. For instance, cellphones help drivers navigate the road better, but they can also contribute to distracted-driving accidents. Do you believe there is a point where damage caused by technology outweighs the benefits?
- In the same way that new computer models with built-in security software cost more than older computers that require separate security software, autonomous cars may one day have a bigger price tag that accounts for insurance. Do you believe "built-in" protection justifies a high price tag? Why or why not?
- Do you feel that the terms "autonomous" and "self-driving" are confusing to consumers? Is there concern that they might be used interchangeably? Why or why not?
- What ethical issues arise as people allow their technology to make decisions for them?
- At what point does autonomous technology become a detriment to humans’ ability to learn and think critically on their own?
Associate Professor, Computer Science and Engineering, NYU Tandon School of Engineering
While technology provides new, convenient solutions, it can also create life-threatening problems. For instance, cellphones help drivers navigate the road better, but they can also contribute to distracted-driving accidents. Do you believe there is a point where damage caused by technology outweighs the benefits?
Absolutely, but I think that it depends on the technology. I would argue that many technologies we use today fall into this category (Facebook, many types of plastic containers, etc.). Yet, we have a hard time staying away from things that are convenient but cause more harm than good, especially if we do not see the risks clearly.
In the same way that new computer models with built-in security software cost more than older computers that require separate security software, autonomous cars may one day have a bigger price tag that accounts for insurance. Do you believe "built-in" protection justifies a high price tag? Why or why not?
It will be interesting to see if this is actually true, especially a few years after adoption. Many of the projections show the number of accidents decreasing as autonomous/self-driving cars take over. As someone who doesn't enjoy driving, I certainly would pay more for a fully autonomous car even if the risk of an accident were the same. For a less autonomous vehicle that still requires some manual intervention, I think the equation becomes trickier for me. I do think, overall, it will depend a lot on the consumer.
At what point does autonomous technology become a detriment to humans’ ability to learn and think critically on their own?
People already trust things like Google Maps more than they should when navigating and have gotten into trouble by disregarding warning signs, etc. I think fully autonomous driving will in some ways be safer because users can simply let the car drive for them. My concern is more for situations where the car expects the human to retake control to handle difficult situations. The switchover is difficult for the human to handle, and then being put in such a situation will certainly be a challenge.