Self driving car insurance
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Distracted driving has become a huge problem for Americans. In 2018, there were over 400,000 injuries and more than 2,800 people who lost their lives from accidents attributed to distracted driving.
In response, self-driving technology was created as a way to improve driver safety and minimize distracted driving. The Insurance Information Institute (III) predicts that by 2035, there will be 3.5 million self-driving vehicles on the road. In the meantime, more and more Americans are opting for this extra safety technology to keep themselves and their families that much safer.
After the massive investment of upgraded technology, many find themselves wondering what, if any, impact that these safety systems have on the cost of your auto insurance. We investigated so you don’t have to.
What is a self-driving car?
A self-driving car is a vehicle that uses advanced technology to drive itself without the use of an actual driver. These are also known as driverless or autonomous cars. These vehicles use a combination of high-tech software and special sensors that work together in order to control and operate a vehicle.
Traditional features like brake control and cruise control are mainstays on most vehicles these days, serving as stepping stones to even bigger and better technology.
These are some of the types of self-driving features that are available today:
- Blind spot detection
- Electronic stability control
- Forward collision warning
- Lane departure warning
- Rearview video systems
- Automatic, pedestrian automatic and rear automatic emergency braking
- Lane centering assist
- Lane-keeping assist
- Traffic jam assist
The National Highway Traffic Safety Administration (NHTSA) predicts fully automated safety features and highway autopilot will be available to the masses by 2025. We’re already more than halfway there.
Levels of Vehicle Automation Systems
|Level||Automation Type||Places Allowed||Type of Technology||Conditions|
|1||Driver assistance||Limited roads or modes||Adaptive cruise control or lane centering||Driver-supervised|
|2||Partial driver automation||Limited roads or modes||Adaptive cruise control and lane centering||Driver-supervised|
|Limited area, roads and/or modes||Automated driving||Dense traffic at low speeds|
|Limited area, roads and/or modes||Automated driving||Within city center using geo-fenced location|
|Everywhere on-road||Automated driving everywhere||Not yet legal|
When there is a vehicle crash, human error is usually to blame in one way or another. IIHS stresses the importance of removing that human error from smart automation. If self-driving cars drive too much like humans, we are not any better off. IIHS Vice President for Research Jessica Cicchino writes in the study, “It’s likely that fully self-driving cars will eventually identify hazards better than people, but we found that this alone would not prevent the bulk of crashes.”
That is a statement echoed by her colleague, Research Scientist Alexandra Mueller, who adds, “Building self-driving cars that drive as well as people do is a big challenge in itself.”
The answer is in continued studies and advancements in science and technology that are sure to come – and soon.
Self-driving cars and insurance
The IIHS identifies five different kinds of driver-related factors associated with crashes:
- Sensing and perceiving: This includes things like driver distraction, hampered visibility and an inability to identify hazards.
- Predicting: This applies to driver misjudgments, where it relates to things like speed, space and driver impulse.
- Planning and deciding: This is when you drive slower or faster than conditions call for, as well as aggressive driving and not allowing for enough space between your vehicle and those around you.
- Execution and performance: This refers to inadequate improper evasive maneuvers and overcompensation.
- Incapacitation: This pertains to impairments relating to alcohol or drug use, medical issues or even falling asleep behind the wheel.
Right now, there is no legally operating, fully self-driving vehicle on American roadways, but that does not mean that it is far off. The NHTSA estimates this will be a reality come 2025.
Self-driving car insurance issues
The kind of self-driving features that you have in your car, such as automatic braking, take care of some of the risks associated with distracted driving. This, in turn, makes you less of a risk to insurers. On the other hand, this can significantly lower your risk of an accident. Insurers make their money off bad drivers, but if self-driving cars begin to eliminate that market, insurance providers will start to look for other ways to make a profit.
How will self-driving cars affect insurance premiums?
Even as auto technology progresses, there will still be a need for liability coverage. It is the other parts of auto insurance coverage that are likely to change. Experts at the RAND Institute predict that a new kind of car insurance will emerge in the coming years. With expensive burgeoning technology becoming a regular part of auto manufacturing, insurance providers will be looking to recoup these costs through higher premiums.
All of the burden may not fall on the consumer, however. RAND notes that there will likely be a growing responsibility placed on auto manufacturers and suppliers to repair what is broken and prevent future incidents from occurring. This means that drivers could expect far less liability on the road.
RAND suggests no-fault insurance will be a popular and affordable way for insurers to handle the coverage of self-driving cars. Under this type of insurance, drivers will be required to carry personal injury protection (PIP) and file a report when there is an incident, but liability will be based on far more limited restrictions. If the car is driving when there is an incident, the problem lies within the car itself, so insurance providers will compensate drivers for their injuries and look to manufacturers to foot the bill.
Will self-driving car insurance premiums go down?
Just because self-driving technology is covered, it doesn’t mean that you are entirely off the hook. Accenture predicts that we will instead see new categories of insurance emerge, like cybersecurity coverage, product liability insurance and some sort of public works coverage that would protect you from hazards on the road, such as the dreaded pothole. The cost of all these new types of insurance coverage can quickly replace any potential savings from manufacturer liability in what Accenture predicts will be worth $81 billion as soon as 2025.
In the meantime, the data looks good. IIHS and the Highway Loss Data Institute (HLDI) show that forward-collision warning technology has already created a decrease in claims for both collision and property damage liability, especially where automatic braking is present. Ultimately, results depend on the manufacturer itself, but there is no denying that self-driving technology is already changing how the insurance industry is processing its claims.
There will still be the need for traditional types of coverage, like wind, flood or hurricane coverage. Drivers will also need to protect themselves from theft and vandalism, both types of damage that have no bearing on how you drive your car.
Finally, the cost of your auto insurance will also depend on where you live. The minimum requirements for insurance coverage vary from state to state, with some states requiring far more coverage than others. Self-driving technology laws will also begin to play a part in how your insurance policy is handled.
Driverless vehicles may not lower the cost of your future insurance premium, but it will likely be well worth the cost to keep you and your family that much safer on the road.
- Self-driving vehicles, or driverless vehicles, incorporate new technology to operate without a human driver.
- Today, driverless technology includes features like blind-spot detection, lane departure warning, electronic stability control, lane assist and self-park controls.
- The Insurance Information Institute predicts that there will be 3.5 million driverless vehicles on the road by 2035.
Currently, we are limited to partially driverless cars. As technology grows, we can expect these features not only to change what cars we buy but also the features that we use and the auto insurance policies we purchase to protect them.