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Insuring Self-Driving Vehicles

Insuring Self-Driving Vehicles

The transportation company Uber recently made headlines in the state of California by adding self-driving cars (also known as autonomous vehicles) to their fleet. Self-driving cars have been tested in controlled environments for several years, but are now being tested on roads in a city near you, though some are not operating legally.

Are Self-Driving Cars Legal?

The short answer is: no. The longer answer is: not right now, but possibly soon, depending on where you live.

Currently only 7 states have passed legislation that allows for the testing of self-driving vehicles on public roads, including California. These laws only cover test vehicles, and do not include the sale or use of these vehicles for anything other than testing purposes.

Many other states have legislation that has either recently failed or is currently in committee. While the process of legislating testing and eventual sales of self-driving vehicles could gain momentum with positive test outcomes in other states, a world full of autonomous vehicles still seems pretty far away.

Why All the Regulations?

In states like California where testing is legal, vehicles are expected to be registered and clearly marked as test vehicles. A human driver usually must accompany the vehicle, ready to take over at a moment’s notice should the vehicle fail to comply with the rules of the road.

The Uber vehicles in San Francisco were not registered, nor were they clearly marked as test vehicles, blatantly violating state regulations and turning fares into unwitting guinea pigs. How many people would willingly get into a test vehicle, considering the potential risks?.

Testing regulations also require that the manufacturing company provide proof of financial responsibility or insurance with limits of up to $5,000,000. While most of the manufacturing companies can afford to pony up such high limits, getting to that money in the event of an accident may be tricky for the accident victim.

All of this red tape may seem like the government trying to keep self-driving cars from coming to fruition, but regulations like these are in force for public safety reasons. In just the first few hours that Uber’s test vehicles were on the road, at least one ran a red light at the same time a pedestrian entered the crosswalk. There have also been other reports of red light runners and near-miss accidents. (Uber has since cancelled their San Francisco trials.)

What’s Next for Self-Driving Vehicles?

Testing, testing and more testing is on the horizon for the vehicles of the future. While some manufacturing companies may want to skirt the rules to speed up the testing process, often it just ends up slowing things down.

While manufacturers and states try to get a handle on regulating these vehicles to get them on the road and into the hands of consumers, the insurance industry is watching closely. What impact will these vehicles have on auto insurance regulations and premiums? What will be the challenges of insuring self-driving vehicles?

Human error factors heavily into motor vehicle accidents, so there is some belief that the frequency, severity and cost of vehicular crashes will decrease, resulting in lower premiums to vehicle owners. However, special training may be required for human drivers who may need to intervene in the event of a problem. New drivers may lack the skills necessary to avoid potential accidents, since they don’t have the experience that today’s drivers have.

Another belief is that liability will shift more toward the vehicle manufacturer. With all of the technology involved in producing these vehicles and their crash-avoidance features, any accident will almost certainly be the fault of the vehicle, and not the owner/passenger.

For now, driverless vehicles are still science fiction for most Americans. Our advice to you is that if your rideshare vehicle shows up without a driver, take a pass.

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