When new technology is introduced new standards and rules need to be set. A proposal has made its way to the Florida State Senate that, if passed, would set new insurance requirements for drivers working with app-based transportation network companies — a product created very recently in response to the growing popularity of services such as Uber and Lyft. Measures like this are created to ensure victims of auto accidents can obtain compensation, as well as to protect the party at fault from financial ruin. While the matter of ride-sharing had a relatively straightforward solution, the oncoming shift to self-driving cars produces a tougher problem for the insurance industry and legislators alike .
Autonomous vehicles confuse the issue of liability. If two drivers of traditional cars get into an accident, the personal insurance policy of the party at fault will cover the property and bodily damages sustained by the victim. But what happens if the at fault vehicle was being operated by a computer? Presently, the answer is unclear. According to a report byBusiness Insider Intelligence, as much as 10 million cars will be outfitted with self-driving features by the year 2020. If true, this does not leave much time to come up with a solution to the liability issue.
“Somehow or another we need a mechanism to allow for compensation from auto accidents” says Marc Mayerson, a lawyer and adjunct professor of Insurance Law at Georgetown University. Mayerson adds, “In theory self-driving cars would not create negligence liability for the passenger/non-driver/owner of the car.”
For most drivers, liability coverage accounts for a large part of their auto insurance bill. Repairing physical damage to your own vehicle is a drop in the bucket compared to the risk of paying hospital bills or court fees when you injure another individual. Just as we’re beginning to see laws for ride-share insurance requirements emerge in states like Florida, similar requirements for personal policies have existed since as early as the 1920’s. In California, for example, drivers are required to carry at least $15,000 in bodily injury coverage per person, and $30,000 per accident. Plus, the state mandates a minimum of $5,000 property damage coverage.
If liability is taken out of the equation, it stands to reason personal auto insurance premiums for owners of self-driving cars would become much lower. At that point, who would shoulder the bill for liability? “One model would be to have the car manufacturer bear all the liability and impose that liability simply based on the autonomous car’s being a substantial cause of the injury,” Mayerson suggests. If an accident is the result of the computer’s failure, it becomes reasonable to assume the fault would then lie with the manufacturer.
Insurance costs being passed down to automakers aren’t necessarily good news for consumers, however. If the car manufacturers are facing increased operating costs due to liability concerns, they may make up for that by increasing the price of the vehicles. In other words, while autonomous vehicle owners may save money on their insurance policies, the cost may end up trickling down to the price of their new ride.