It’s extremely likely that driverless cars shall be operating on our roads within the next decade. Technology is developing quickly and various areas of the UK have already legislated that testing of these vehicles will be permitted. Once driverless cars become more commonplace on our roads, it is possible that insurance providers will have to re-evaluate the traditional motor insurance model.
Many consumers will be concerned with how driverless cars might affect their insurance premiums. This topic continues to be debated, because no real precedent has yet been set.
Ultimately, the advent of driverless vehicles is expected to lead to lower insurance premiums for those who own these models. It is estimated that around three quarters of all road traffic accidents are caused by driver error, as opposed to mechanical defects or faults with the road itself. The technology which will operate within these vehicles should remove the possibility for human error from within that particular vehicle. Theoretically, this should help to reduce the number of accidents that occur on the roads.
Recent research has shown that the use of autonomous parking technology in driver-operated vehicles has already helped to reduce parking accidents by 15% in some places. As technology continues to improve, accident figures are expected to continue to drop. Some accidents will still happen however, as technology is not infallible.
Of course, during the period where driverless cars and driven vehicles are sharing the road, there will still be a high number of accidents caused by human error. Although driverless cars are being designed to react to the actions of other vehicles on the road and adapt to changing situations, other road users could force situations that it would be impossible for the driverless car to escape from without an accident. It is hoped however that the improved reaction times from the vehicles, compared to the reaction times of human drivers, could mean that these accidents are less serious.
It therefore follows that reductions in the number of payouts and the cost of each payout should lead to lower insurance premiums across the board. In order to remain competitive, insurers have to stay relatively close to their bottom line. If the bottom line is reduced because of reduced payouts, the rates that are offered to the consumers should also be reduced. These reductions should ultimately be offered to drivers across the board. Insurance providers may also appear which are entirely dedicated to covering driverless vehicles.
Nonetheless, in the early years, driverless car owners should expect high premiums. Until insurance providers can get a full understanding of how these cars work and what type of accidents they are likely to be involved in, the premiums will stay high. The costs involved with the purchase and maintenance of driverless vehicles will also be highest during the first few years of public sales, so insurers will need to make higher payouts to anyone whose vehicle is damaged. Theft and Fire cover may end up adding a huge amount to insurance premiums for these vehicle owners.
It is likely that some additional liability will be taken on by the manufacturers of driverless vehicles, and this may help to keep costs down for trailblazing buyers. If a car crashes whilst it is supposed to be operating in driverless mode, the manufacturer may be considered to be liable, because the product has failed to meet its primary function. Of course, this liability will be dependent on certain circumstances. For example, the buyer may need to take out extended warranties to get continued manufacturer’s liability insurance once the standard liability period has elapsed. The owner may also need to take certain steps to prove that they have done everything that is necessary to keep the system in working condition. For example, unauthorised hacks and failing to meet upgrade schedules could absolve the manufacturer of liability.
Once driverless cars have really started to take off in the United Kingdom, owners of user driven vehicles may find that their premium start to become higher than those of people with driverless cars. This is because of the expectation that they will be responsible for a greater number of road traffic accidents. Even careful drivers with no previous record of accident liability may find that their premiums will rise because they are part of a group which is perceived to hold higher risk.
Of course, these predictions may not prove to be accurate. The insurance industry will have to adapt to all new vehicles that start to appear on British roads. It is expected to be a time of uncertainty for the British insurance industry, as the traditional insurance model may no longer meet the needs of road users. If driverless cars start to become more popular in the United Kingdom, vehicle owners should expect a period of fluctuating premiums and uncertainty.