Here’s how insurance will adapt to driverless cars

Here’s how insurance will adapt to driverless cars | Insurance Business America

Here’s how insurance will adapt to driverless cars
Driverless cars are no longer the stuff of science fiction, with major automakers around the globe racing to produce vehicles that drive themselves in two years. But as revolutionary and fantastic these hi-tech cars will be, what are their implications on the insurance industry?

The Huffington Post reported that driverless cars are projected to reduce insurance costs by as much as 30%. The market, however, is still at its infancy and has a lot of room to develop; insurance costs will likely change accordingly as insurers consider the potential risks to drivers, their passengers, and their vehicles.

CEO of insurance and risk management consultant INGUARD Parker Beauchamp said that insurers will have to anticipate the change in the way people “drive” in driverless cars, as well as how such automobiles work. He then shared his ideas on how the futuristic cars could impact the auto insurance industry.

Beauchamp detailed that driverless cars will be developed with a variety of control and autonomy options for consumers to choose from. Some driverless cars could be completely autonomous and can drive themselves without input, for instance, while others would work just like regular cars but with limited automation for things such as steering, acceleration, and braking.

He underlined that—depending on how much of a car’s functions are automated—driver error could potentially be written out of the equation when determining liability. Beauchamp notes that drivers might even need a completely different type of auto insurance to provide protection. Similarly, insurers will have to adjust their coverage to recognize any new risks brought about by driverless technology.

Beauchamp also contemplated on what happens should a driverless car be held responsible for an accident. He mused that such an event could lead to a higher percentage of product liability claims, since the cars can be held liable as “drivers”.

In terms of personal insurance, Beauchamp tinkers with the idea that there are no actual drivers inside a fully-automated driverless car—everyone is a passenger. With everyone classified as a passenger, who would be held responsible for accidents and malfunctions? Should the driver be held liable for the mishap, or the manufacturer? Can both be held liable?

Commercial insurance could also change with the introduction of driverless vehicles, Beauchamp noted. When companies such as Uber and Lyft use driverless cars to ferry their clients, how will such automobiles be insured should they encounter an accident while on duty?