Autonomous cars and strong impact on your Auto Insurance

Meta: Current developments of autonomous cars raise issues for insurance policies. So, how those cars will impact your auto insurance? Read up on to know more.

Introduction

Self-driving technology is still new, but already a reality. It is improving every day thanks to the machine learning and owner input.


The growth of self-driving cars, so-called autonomous cars, also raises some complex questions for insurers. And this article showing how self-driving cars will strongly affect your auto insurance may help you answer some of those curious questions.

The recent status

The Florida State Senate has currently received a proposal to set new insurance requirements for drivers working with transportation network companies that provide app-based ride services such as Uber and Lyft.

This bill is supposed to not only bring the obtain compensation amount to victims of auto accidents but also protect the party at fault from the financial crisis.

However, while those ride-sharing services have their own simple solution, the rise of on-demand autonomous vehicles makes the insurance industry and lawmakers face a lot of difficult problems.
In fact, the auto insurance industry is one of the biggest victims of the oncoming shift to self-driving cars. And the more autonomous cars produced, the higher the impact. Two main impacts are presented below:

The liability issue

The first impact mentioned is the issue of liability. In case two drivers of traditional cars get in a crash, the personal insurance policy of the party at fault will include the victim's injuries and vehicle damages.

What if the at-fault vehicle was a self-driving car? Who will be liable for the damages — the manufacturer? This question is really worth considering.

Presently, it is reported that about 10 million cars will be outfitted with self-driving features by the year 2020. If this comes true, it will be necessary to propose a liability issue solution.

Moreover, some people also believe that automakers have to be responsible for the cost of insurance in some particular cases. In reality, for instance, Google or Mercedes-Benz already accepts the liability in cases where a vehicle’s self-driving system is at fault for an accident.

Anyway, this process won't always go smoothly because much litigation may happen early. So, there should be extensive tracking sensors in vehicles to determine whether a human or AI driver was at fault in an accident before automakers are blamed for full liability for crashes.

The driving up of a car’s price

Secondly, the auto insurance costs could be built into the price of a car. In 2015, Volvo announced that it would assume full liability for an accident caused by its vehicle that was equipped with Volvo's own self-driving systems and was in fully autonomous mode at the event of the accident.

Insurers would then begin to sell policies to the automakers instead of individual drivers since the automakers would be the liable party.

However, this is not really beneficial for consumers. If car manufacturers have to face increased operating costs as a result of liability concerns, they may decide to drive up the price of the vehicles and the ability to purchase a car might be pushed out of reach for most consumers.

So, while autonomous vehicle owners could save money on their insurance policies, the cost may end up trickling down to the price on their new car.

Does it matter if you don’t buy an autonomous car?

Even when users don’t intend to own a self-driving car, they are likely to financially benefit from this vehicle.

If automated cars really do make roadways safer, insurers may need to consider lowering their premium prices across the board.

In case of an increase in claims that makes the company pay out more benefits, they may need to raise rates to resolve their losses. And if they are to raise rates in any state by the current auto insurance pricing model, they have to send the proposal submitted to the Department of Insurance.
In addition, safer road conditions may cause a decreased demand for auto insurance. If so, insurance companies would need to consider their pricing again and potentially lower the cost of their policies across the board.

Some unchanged things

Providing that Americans own cars, insurance will still remain in one form or another. Ultimately, most users would value their vehicles and ensure that they are satisfied compensated or protected in the case of an accident or theft.

Even when liability is not included in the equation, automated and traditional car owners are highly recommended to compare quotes across different insurers if they are to save money.

According to a study of cost in California, for instance, the average price of auto insurance from the cheapest company is nearly half of that from the most expensive one.

Factors like market share and experience during the claims process will always cause differences among issuers, as they set the price for various products based on their ability to remain competitive in the space and maintain sustainable operating margins.

Conclusion

Those are all about how autonomous cars will impact the auto insurance and some other issues around this status. Hopefully, this article will give you more information and help you answer some of the curious questions related to your auto insurance.

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