An Update on Driverless Cars and Car Insurance

The National Highway Traffic Safety Administration (NHTSA) sent a letter to the head of Google’s self-driving car program on February 4th stating according to federal safety standards, a self-driving or autonomous vehicle’s software could be considered a “driver.” This announcement, along with a couple of other items that have come to light in the past few weeks provide an interesting perspective on autonomous vehicles and car insurance.

The NHTSA letter goes on to state, “If no human occupant of the vehicle can actually drive the vehicle, it is more reasonable to identify the “driver” as whatever (as opposed to whoever) is doing the driving. In this instance, an item of motor vehicle equipment, the [self-driving system], is actually driving the vehicle.”

In this case, the only vehicle that fits this description are the pod like cars Google has produced which do not come equipped with steering wheels or pedals. Without a steering wheel, or other mechanism to steer, or pedals to brake or accelerate, there can be no human intervention. Nothing else but the software can be considered the driver. Such a vehicle would provide incredible access for people who are blind or visually impaired, disabled, elderly, or young, however there is one interesting “hitch.”

Interestingly enough, the NHTSA’s wording conflicts with California’s proposed legislation for autonomous vehicle operation on public streets. Their proposed legislation requires a licensed human driver to sit behind the wheel and be prepared to take over driving the vehicle when situations requiring it to do so arise.

Documents released by Google in January, and reported by report self-driving cars would have caused 10 accidents during the past year had the human driver not disengaged the driving system and taken over. 2 of those 10 accidents would have been with traffic cones. Given the number of miles Google’s vehicles drove last year, that’s not bad, but it does demonstrate that humans can’t be counted out just yet.

Autonomous cars are coming. Technology is evolving and more components are leading us toward this reality including collision avoidance systems, automatic braking, lane departure warning, adaptive cruise control, and even parking assist (see There will be technology related failures such as the ones Google identified, as well as ones caused by weather. Volvo found out with their self-driving XC90 became snow (or ice) blind when buildup occurred.

Beyond the technology, legislation from states such as California, and the NHTSA’s stance, open the doors to the future of self-driving vehicles. But what are the implications for insurance companies that write car insurance?

In the short term, think 5 to 10 years, car insurance as we know it today, isn’t going away. As long as a human driver can take over operation of the vehicle, they still have the opportunity to cause an accident and be found to “at fault.” As the price of this technology becomes more affordable and proven, there will be broader adoption by drivers. Looking out beyond 2025, I believe there will be a period lasting 10 to 20 plus years where there will be a mix of autonomous and non-autonomous vehicles sharing the road.

During this time, the ratio of autonomous and non-autonomous cars will be ever changing on our shared roads. Car insurance will be undergoing a shift too. Providers of autonomous software such as Google, Apple, or the auto makers themselves will carry increased limits of product liability coverage to pay claims caused by technology related failures while owners of human operated vehicles will continue to carry standard car insurance.

At some point technology may negate the need for car insurance as we know it today. This will lead to seismic changes for insurance companies who depend upon car insurance premiums to bolster their financials. Car insurance rates could drop dramatically or become non-existent once autonomous vehicles rule the roadways, and insurance may companies may look vastly different from what we see today.

What do you think? Share your comments, thoughts, and questions with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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