March 26, 2013

Driverless Cars and the Anticipated Car Insurance Complications

The greatest challenge of the modern age has been learning how to keep pace with the dramatic surges in technological innovation.  The forthcoming advent and use of driver-less cars on a very broad scale has raised a number of important auto insurance concerns. While nearly 90% of all auto accidents are known to be related to driver-error, the switch to entirely automatic options will not eliminate all likelihood for collisions.  Because of this, people, companies and governing bodies throughout the world are scrambling to determine how liability might be assigned in the event that two self-operating vehicles crash.

Product Liability

The most obvious solution would be to hold the producers of the self-operating vehicles accountable for any auto malfunctions that resulted in the accident.  There are several additional factors, however, that serve to make the problem of liability assignment more complex than this single solution can address.  These include factors that are external to the actual vehicles in question among other things.

Unfair Market Conditions

Lawmakers must additionally consider the ability of automakers to remain competitive in a potentially profitable market.  If forced to absorb the full measure of liability for all accidents that their products were involved in, these companies would not survive.  Furthermore, they would likely refuse to continue producing these goods.

Using History to Resolve This Issue

The history of pharmaceutical companies, particularly those responsible for the development and manufacture of immunizations, shows how excessive liability can be problematic for both producers and the industries they fill.  When early immunizations began causing consumer illness, the entire responsibility for these issues fell on the shoulders of the product manufacturers.  As a result, these companies discontinued the production of immunizations indefinitely, given that the associated risks were simply too high.

To encourage production, legislators opted to use the monies from a special tax fund to settle any financial claims resulting from immunization-related illnesses.  Thus, consumers were ultimately resolving these matters via their own tax dollars.  While this is certainly one viable solution, it is also one that would require a mass transition to self-operating vehicles in order for there to be sufficient taxpayer support for the necessary tax fund.

The Primary Cause of Accidents in Early Testing

While self-driving cars are not expected to hit the market in any major way until approximately 2020, there has been a significant amount of testing performed, particularly in the Silicon Valley area of California.  The majority of recorded accidents were due to driver errors, made by motorists who were operating conventional vehicles on the road.  Even these early studies will have an impact on how auto insurance and manufacturer liability is structured.  Many governing bodies are working hard to iron out the wrinkles in this area of concern, given that they are eager to support this transition in driving technology.

Hybrid Vehicles

The potential introduction of hybrid vehicles is another point that lawmakers must consider.  This would have a direct impact on auto insurance policies and how liability would then be determined.  With these autos, it would be possible to both manually operate the car and to put it in automatic mode.  The first question of liability in these instances would then be whether the car was driving it or if it was being manually operated by its owner.

The Car Insurance Industry

Yet another major concern is how different solutions will impact the long-term health of the car insurance industry.  The assignment of liability is but one issue that must be addressed when accepting this major technological innovation as the norm.  With the formation of a special tax fund, auto insurance companies will have much more nominal amounts to cover when claims are submitted and will thereby be relegated to charging their clients much lower premiums.  Their focus might next be on theft, vandalism and other aspects of vehicle damage that are not accident-related.  The financial consequences of this major change in business are therefore, also being factored into these early discussions about accident liability for self-driving vehicles.

The post was written by Steve Whiley a writer for American Auto Insurance.

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