The advent of autonomous vehicles as coming closer and closer – and it is poised to revolutionise the landscape of transportation. And with it, the world of car insurance. As we are inching closer to a net-zero world and a future where self-driving cars will become a more common and normal sight on the roads, understanding the implications of that for car insurances suddenly becomes crucial, too. What and how will they most likely change?

The Liabilities are Shifting

One of the most significant changes that autonomous vehicles bring to us, is the shift in liability. Traditionally, it is the drivers that are responsible for accidents and incidents on the road, whenever they happen. However, with self-driving cars and this figure out of the picture, the focus now shifts more towards manufacturers and their software developers. In the event on an accident caused by a technical malfunction, the liability may – and should – all on the entity responsible for the vehicle’s autonomous technology. With this, things like product liability insurances now are of increased importance. Though it is still sensible to get a car insurance quote on the vehicle to protect yourself, as with the vast amount of data through sensors and advanced technology generated, insurers can leverage these to assess risk more accurately. Car insurance premiums may transition from being primarily based on driver behaviour to a more data-driven model. Here, factors like the vehicle’s autonomous capabilities and safety record might play a more significant role in determining premiums. Additionally, manufacturers and technology providers alike may need to invest in comprehensive product liability coverage from now on, too, to protect themselves from legal and financial consequences in the event of system failures or malfunctions.

Reduced Frequency of Accidents – Higher Need of Cybersecurity?

Autonomous vehicles are, of course, designed to be a safer and more efficient way of transport than traditional vehicles. As a result, the frequency of accidents on the road is expected to decrease significantly. This reduction could lead to lower overall claim payouts for insurers – potentially resulting in decreased premium costs for autonomous vehicles owners to begin with. There is another downside to this, though, which is the reliance on advanced software and connectivity in autonomous vehicles – a valid cybersecurity concern. Just as with every other advanced technology, there are risks of software vulnerabilities, data breaches, and system hacks – which also may become integral components of future insurance policies. Collaborations with autonomous vehicle technology providers are most likely going to be established and may involve risks assessments, data sharing agreements, and a powerful way of protecting them.

Transition Period Challenges in Hybrid Environments

Of course, the gradual adoption of autonomous vehicles poses some challenges during the transition period. With them already being on the horizon, it will still take some time before we’re finding ourselves in a completely self-driving fleet. So, in this period, where autonomous and traditional vehicles coexist on the roads, new complexities need to be dealt with. Insurers must adapt their policies to cover a mix of vehicle typed and driving modes and flexible enough to accommodate a mixed fleet. Deeply innovative solutions to address potential gabs in coverage during the transition are needed – and are sure to be a challenge. In the end, it’ll come down to the collaboration between insurers, regulators, and technology providers, to ensure a seamless integration of autonomous vehicles into our broader transportation ecosystem.