Future Self-Driving Cars will impact the Auto-Insurance?

Future Self-Driving Cars will impact the Auto-Insurance?

Senate, the upper house of the Australian parliament received a new proposal, which stated the need of new insurance requirements for the drivers who are working for the app based ride-hailing companies like Uber, Lyft, etc. officials of the auto insurance are having discussions in this regard. And it is also believed that, these ideas about the new auto-insurance requirements will help the victims of the auto accidents.

Self-Driving Cars

This bill would also protect the victims from the fault of the financial collapse. The solution behind the insurance of the ride-hailing services will be available in a straight-forward manner. Now the problem is with the self-driving cars.

As per the current law, if two traditional cars get into the accident, the insurance policy of the faulty driver will cover the bodily damages and the property damages of the victim. But what will be the situation if the faulty car is being operated by the computer with the software embedded in it. It was predicted that, by 2020 about 10 million self-driving cars will be manufactured. If this prediction becomes true, then the situation becomes tougher and the liability issue solution would be implemented.

The lawyer and the adjunct professor of insurance law at Georgetown University, Marc Mayerson said that, by some way the insurance companies have to provide the mechanism, which allows the compensation from the auto accidents. But, it is aimed that, self-driving cars will not create any sorts of negligence liability for the passenger, owner and the non-driver of the car.

Liability coverage will cover a part of the auto-insurance bills for many people. The cost of repairing the damaged vehicle will be more or less equal to the cost of the cost of the hospital bills or the cost of the court fees. In the modernized states like Florida, the laws, which are similar to the requirements of the ride-share insurance was available as early as 1920’s. In the state California, drivers are asked to carry $15,000 to the bodily injury to the person, $30,000 for the accident and $5000 to the property damage.

Self-Driving Cars

If liability is removed from the equation, then the personal insurance premiums of the self-driving car owners will be much lower. But the question is that, who is responsible to carry the liability bill. One model suggests that, the car manufacturers have to be responsible for all the liability. And for the autonomous cars, the liability is based on the cause of the injury. If the accident happened due to the computer’s malfunction, then it will be declared that, the fault is on the manufacturer side.

The insurance cost, which is given to the auto manufacturers, will not benefit the customers.

What happens if the customer doesn’t purchase the self-driving car?

According to III, (Insurance Information Institute) many people will have the idea to buy the self-driving car. People believe that, they can have a safe journey with then self-driving cars. Insurance companies will think about lowering the premiums. If the insurance wishes to increase the rates in the particular state, then the company has to submit the proposal to the Department of Insurance. The base rate may be increased due to the legitimate reasons.

If there is an increase in claims, then there are chances for the companies to buy more benefits. They may need to increase their rates to compensate the losses. As the roads become safer with the self-driving cars, the insurance companies will have the chance to pay out less with claims and the ability to justify the increase in claims will be restricted.

Safer road conditions may also create the chances for lowering the auto insurance. If this will be the case, the insurance companies have to modify the pricing accordingly. And at the same time they may lower the cost of the policies.

What remains unchanged?

Insurance will be associated with cars till people stop buying the cars. Most of the people value their vehicles and consider them as one of the assets, so they will ensure their vehicle in order to protect it. They want to save the vehicle from theft and damages.

Both the traditional car drivers and the autonomous car owners seek insurance and they have to compare the quotes of different companies in order to save money, even if the liability is eliminated from the equation.

In California, the cost of the auto insurance of the cheapest company will be half of the cost of the most expensive one. Claims and the market share will differ among the different insurance companies, because the companies allow various prices for the products based on the ability to remain competitive with the products with the other companies and also to remain at sustainable operating margins.

Developments in self-driving cars

National Highway Safety Administration’s 2013 preliminary statement on self-driving vehicles were updated on January 2016, by Anthony Foxx, the transport secretary. And he released the new policy updating the old one.

The agency announced a $3.9 billion commitment in March 2016 to encourage the adoption and development of safe vehicle automation. The agency will provide guidance to the industry for establishing the operations for the safe fully-autonomous vehicles.

Self-Driving Cars

In 2011, Nevada was the first state to introduce the autonomous vehicles. California, Michigan, Florida, Tennessee, North Dakota and Washington D.C followed Nevada, and these states have passed the autonomous vehicle legislation. Many states have started introducing the autonomous vehicle legislation since 2012.

Tesla motors in 2015 developed the car with the auto-pilot mode, which allowed self-steering, braking and land-switching. In 2016, the death due to the autonomous was first reported. NHTSA founded, which technology was used by the Tesla Motors to develop the autonomous vehicle. Later, the company reported the reason for the accident. Sensor failed to recognize the truck and the accident killed the owner of the vehicle.

An III conducted a survey in 2016, 55% of the people who were surveyed told that, they will not use the autonomous vehicles, 50% of the people said that, the owner of the vehicle should be responsible for the accident and 25% of the people said that, they will pay more for the driverless car, so that the owner can cover the manufacture’s liability in case of any accident.

An III reported that, there will be 3.5 million self-driving cars by 2020 and 4.5 million cars by 2030. The institute has quoted that, these vehicles will not remain as fully autonomous vehicles, but at certain times they will be the fully-autonomous vehicles.

Regulation of insurance

Usually insurance is a state-regulated one. Each and every jurisdiction will have their own set of rules of the auto-insurance. The liability is of two types. In some states, the liability is based on the no-fault concept, where the insurance companies will pay the victim regardless of fault. In other states, it is based on the tort system.

For the self-driving vehicles, if the car manufacturers accept more responsibility for the damaged property, then a greater rule will be pushed by the federal government to eliminate some of the cost, which comply the rules of 51 jurisdictions.


During the transaction to the fully autonomous vehicles, the insurance companies will depend upon the telematics, which are known as the black boxes, this device will be helpful to monitor the driver activity. Usage-based insurance policy is based on the user behavior.

Most of the experts predict that, the autonomous cars will bring a change in the insurance policies.    

Author Bio:

Anand Rajendran is the Co-Founder and CEO of Zoplay. He is a writer and coffee lover. He has is a graduate in Computer Science and Post Graduate in Entrepreneurship and leadership from Ulyanovsk State University, Russia. He is a passionate blogger & SEO Specialist. Zoplay is a Software Development company which has launched Cabily Script which is a Uber Clone with Android and iOS apps.


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Anand Rajendran is CEO and Co-Founder of Zoplay, best PHP scripts development company located in India. Zoplay is a part of Casperon Technologies a leading social and mobile development company. I’m a Tech geek, Digital marketing expert, Entrepreneur, and Atheist who loves to write everything about PHP Scripts and mobile application development. Cabily script is a clone of Uber, which developed by the tech gigs of his company.

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