Auto Insurance for Self-Driving Cars

Advances in self-driving technology have been talked about almost ever since cars first came into existence. Today, with autonomous features becoming more and more common, manufacturers and consumers alike are excited about what this could mean. But of course, this innovation also brings with it many questions, not least of which is how it will automated car insurance will fit into the insurance system as we know it.

This article explores the current state of self-driving cars on the road and their impact on the world of insurance. Will it be cheaper to insure an autonomous vehicle, or will it be considered a type of liability product?

The Impact of Autonomous Driving on Liability Insurance

The arrival of autonomous technology will bring significant changes to both the insurance industry at large and individual policies. Unfortunately, we cannot yet accurately measure its full impact.

Modernizing the Regulatory Environment

The regulatory framework is trying to catch up with the rapid evolution of autonomous vehicles and insurance. So far, the Department of Transportation (DoT) has not set definitive rules on how to insure an automated vehicle. However, since it has offered voluntary safety guidelines for manufacturers, it is not out of the question that the DoT will also issue guidelines for insurers in the future.

In the meantime, due to the lack of action at the federal level, it has been up to states and local governments to create their own rules on automated car insurance. More than half of the states (29 states) have already passed laws related to autonomous cars. Insurance requirements vary considerably by state: some have not legislated on the matter, while others require both consumers and testing companies to carry general liability coverage.

Most drivers with automated cars only need to meet the insurance requirements of their state. But this won’t always be the case, as regulations will continue to change and technology will constantly advance.

What About Underwriting?

Underwriting is basically how insurers calculate the risk of offering you coverage. So far, they’ve typically looked at things like your driving record and where you live. However, with autonomous vehicles, insurers may start to put more weight on the make and model of the car than the person “behind the wheel.” In the future, manufacturers of these cars may publish their own risk factors. This way, insurers would have a common standard across markets based on extensive testing.

Redefining Fault: Between Claims and Liability

Insurers are in charge of deciding who is at fault after an accident, which determines who takes responsibility. But with autonomous cars, this system is changing completely. Without a doubt, the most interesting and frequent inquiries about this technology revolve around liability.

Today, laws often hold the human driver responsible when an accident occurs. But who is responsible in the case of an autonomous car? What about when we talk about software programmers, manufacturers, or sensor providers? Would they be responsible in a fully self-driving vehicle instead of the passenger? As this technology advances, insurers will have to address these questions.

In today’s autonomous cars, human attention and possible intervention are still required. This means that the human could still be at fault in the event of failures that cause an accident. However, everything indicates that in the future, liability will fall on vehicle and software manufacturers if something goes wrong. We will have to wait and see how this all evolves.

Autonomous safety features like emergency braking and collision warnings promise to reduce accidents. Nevertheless, liability coverage will always be required for those times when things do not go as expected.

The Future of Traffic Accidents

The future of accidents is still uncertain, but we can imagine some interesting changes. For instance, what would happen today if you had an accident with a self-driving car? Nowadays, you act as you would in any other accident: you must take photographs, notify your insurer, not go anywhere other than the scene of the accident, and exchange information with the other people involved.

However, accidents will likely happen much less frequently in the future, as many human errors will be eliminated. But when they do happen, the process is likely to be much easier for everyone involved, as all important information will be automatically sent to the vehicle manufacturer and the insurer.

Automated Car Insurance Rates

It’s not yet fully determined how autonomous vehicles will affect insurance rates. Some believe that they could increase, since the cameras, sensors, advanced systems, and all the other technology that allows these vehicles to operate are expensive to buy and repair. On the other hand, others believe that the number of accidents involving these vehicles will be reduced, which would mean fewer repairs needed and therefore lower insurance rates and low down payments.

Both factors — the high cost of repairs and the improvement in safety — could balance out, leaving rates unchanged. For now, the cost of insuring an autonomous car remains an open question. In the meantime, your insurance premiums continue to be calculated based on typical criteria, such as your driving history, mileage, and location. 

Insurance Available for Autonomous Vehicles

Although we are still far from full automation and its implications, many insurers have already begun to offer options for cars with driver assistance systems. Some of the companies that currently cover these types of vehicles include:

• Allstate
• GEICO
• Liberty Mutual
• Nationwide
• State Farm
• Travelers

On the other side, Tesla has developed its own insurance called Tesla Real-Time Insurance. This product, based on usage, adjusts premiums based on safety scores obtained from driving behavior. However, as of August 2024, this usage-based insurance is not available in California. Still, Tesla offers another coverage option in that state for both its own vehicles and models from other manufacturers. If you own a Tesla, it is worth exploring which of these alternatives best suits your needs.

Compare quotes from multiple insurance companies if your car has autonomous safety features – you may be eligible for a lower rate.

How do Self-Driving Cars Work?

Self-driving technology is surprisingly advanced and represents an ongoing challenge for experts in the field. These vehicles operate thanks to a set of sensors that allow them to analyze their environment and make decisions in milliseconds about how to act.

Among the most commonly used sensors are GPS, lidar, lasers, and various cameras distributed throughout the car. This information is processed by specialized software, which generates a 360-degree view of the space surrounding the vehicle.

From this view, the system plots a safe route and gives the necessary orders for the car to follow. This cycle is repeated constantly, several times per second. For everything to work properly, the software must be extremely precise in its predictions and capable of adapting to different conditions.

The Evolution of Self-Driving Cars

The dream of creating a self-driving car has been around since the very beginnings of motor vehicles. An early example occurred in 1925, when an inventor managed to control a car using radio signals as it drove through the streets of Manhattan, without the need for a driver.

The technology behind today’s autonomous driving, which is based on neural networks, began to be developed in the early 1990s. Although several companies tried to advance in this field, Google stood out by founding Waymo in the 2000s, marking a key point in the development of this technology. Since then, major car manufacturers have entered the competition, and the dispute for the first place in achieving fully autonomous driving continues.

The Current State of Automation in Vehicles

When we talk about “autonomous” cars, definitions can vary depending on the technologies involved. Not all autonomous functions are available yet, but the path to full automation is categorized into six levels defined by the National Highway Traffic Safety Administration.

Levels of Automation

Although technology has advanced greatly, the transition to fully autonomous vehicles is still in development. Reaching the highest levels of automation remains a challenge.

Autonomous Features Available Today

Many automation features are already within the reach of consumers today. Level 1 systems, such as lane centering and adaptive cruise control, are common in modern vehicles. On the other hand, if you purchase commercially an automated vehicle, level 2 represents the highest degree of automation you will get. This includes advanced technologies such as Tesla Autopilot, Full Self-Driving (under supervision), and GMC Super Cruise, which can handle the car in certain conditions.

With Tesla’s latest innovations, such as Full Self-Driving mode, the vehicle can perform tasks including finding you in a parking lot, driving anywhere, parking, and changing lanes. However, it is not considered fully autonomous as it still requires supervision from the driver. The availability of these features in a Tesla depends on the model, version, and year it was manufactured. For example, models produced after September 2014 include Autopilot.

Similarly, GMC Super Cruise offers supervised, hands-free driving, although it works only on compatible roads and requires an active OnStar Super Cruise plan.

The Future of Self-Driving Cars

Currently, researchers are focused on perfecting the technology needed to achieve Levels 3, 4, and 5 of automation. However, it’s still unclear how long it will take for full automation to become a reality, let alone commonplace.

When Will We See Full Automation?

Figures like Elon Musk have been claiming for years that Level 3 and above cars are just around the corner, and have even begun marketing vehicles with advanced features.

On the other hand, many experts, including insurance professionals, believe we’re still a long way from achieving full automation. There are numerous practical and technical challenges that manufacturers must solve before fully autonomous cars are widely accepted and used.

Potential Advantages of Autonomous Cars

Full automation in driving promises to bring great benefits for users. Here are some examples:

• Increased safety: A car is not distracted by a cell phone or able to drive under the influence of alcohol. By eliminating human error, along with functions such as emergency braking and collision warnings, the number of accidents could be considerably reduced, making the streets safer for both pedestrians and drivers.
• Fuel efficiency: Autonomous vehicles can plan optimal routes and adjust their speed based on factors such as waiting time at traffic lights. This means less time wasted idling and, therefore, fuel savings.
• Less traffic: A fleet of cars that communicate with each other could better organize the flow on the roads, reducing traffic jams and optimizing available space.
• Time savings: In addition to being more efficient and faster, these vehicles would free up your time for other activities. For example, you could check emails or work on your laptop while your car takes you to work.

Challenges to Achieving Full Autonomous Driving

Why haven’t we achieved full automation in vehicles?

Safety: The Main Challenge

Safety is a key aspect. Although technology has advanced a lot, it is still difficult for computers to correctly identify and differentiate objects. Developers are continually working on improving the artificial intelligence that performs these tasks. However, before putting it into the hands of the public, it must be thoroughly tested. Deciding whether what is in front of the car is a cyclist or a parked vehicle can be a matter of life or death.

Fatal Accidents With Autonomous Vehicles

The first fatal accident involving an autonomous car occurred in 2016, in Florida, with a Tesla. Since then, there have been other fatal incidents caused by computer-controlled vehicles. These cases highlight the ethical dilemmas and difficulties in assigning responsibility in this emerging technology.

The Risk of Hacking

Like any digital system, autonomous vehicles are not exempt from cyberattacks. In fact, their dependence on technology makes them more vulnerable than traditional cars. This opens the door to serious concerns: what would happen if a hacker disabled a car’s brakes? That’s why these vehicles must have highly robust cybersecurity systems.

How the Public Perceives Self-Driving Cars

The acceptance of any technological advancement depends, to a large extent, on how people perceive it. In the case of self-driving cars, opinions are quite divided. Some can’t wait for their vehicle to take them anywhere without having to touch the steering wheel. On the other hand, some are terrified of losing control. A survey conducted by Pew Research in 2021 revealed that 44% of adults in the United States believe that self-driving cars would not be a good idea for society, while 29% do not know what to think about it. Only 26% consider them a good idea. This division of opinions could be one of the biggest obstacles to the mass adoption of this technology.

Final Thoughts on Automated Car Insurance

If you feel a little lost about the future of self-driving cars, don’t worry, you are not the only one. It is a topic that combines impressive technological advances with complicated questions. For now, if you are thinking about purchasing a vehicle with autonomous features, you can rest easy knowing that you will find insurance options that fit your needs. As this technology evolves, both the industry and we will gradually adapt.