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If an autonomous vehicle hits another car or a pedestrian, who’s to blame? The manufacturer or software developer? Other parties like computer programmers, satellite mapping companies, or even state governments? Or perhaps the non-driving human occupants of the vehicle who might be liable for actions they direct?
With autonomous vehicles or AVs slowly gaining market share and the technology rapidly advancing, this is becoming an increasingly urgent question for insurance companies. Indeed, AV technology could upend the very foundations of the car insurance industry.
First, some basics. The terms autonomous vehicle and self-driving or driverless cars are often used interchangeably, but that's not exactly accurate.
The Society of Automotive Engineers or SAE has developed a taxonomy of AV technology, broken out into levels or tiers.
Most cars qualify as Level 0, with no autonomous driving tech. In Level 0 cars, a human driver is entirely responsible for steering, accelerating, braking, etc.
Level 1 cars employ at least one form of automated driving assistance to help with steering or accelerating and braking, but crucially these aides are not used at the same time. Perhaps the most common form of Level 1 technology is adaptive cruise control, which adjusts the speed of your car while in cruise control mode to keep it a safe distance from other vehicles.
Level 2 vehicles have advanced driver assistance systems or ADAS, which can jump in to handle steering, braking and acceleration in some circumstances. But drivers still must be prepared to retake control of the car.
Examples of ADAS technology include Toyota Safety Sense and the Honda Sensing suite, as well as Tesla’s much-ballyhooed Full Self-Driving Autopilot feature, which despite its name does not come anywhere close to SAE’s definition of a fully autonomous vehicle.
You have to move up three more levels, to Level 5 of the SAE taxonomy, before you achieve a true self-driving car. Level 3 vehicles aren’t even available to consumers nationwide, although Mercedes-Benz’s Level 3 feature Drive Pilot is available to consumers in California and Nevada.
So, the question about who’s liable when an AV hits someone or something isn’t really an issue yet for the American public, as drivers are still largely in control of their cars.
But the technology is advancing rapidly and could outpace the insurance industry and regulators’ attempts to keep up.
At least 17 states have considered legislation dealing with autonomous vehicles this year, according to the LexisNexis® State Net® legislative tracking system. Over half of those states have enacted such measures.
As cars move up the SAE levels of autonomy, auto insurance companies are going to have to adjust their polices to hold automakers and software developers liable for collisions, at least under some circumstances.
In addition, insurers will have to increasingly consider other risks, like cybersecurity flaws, while also, possibly, placing less importance on a person’s driving record or the number of miles driven.
But that’s not all that will have to be accounted for. Differences in the way states regulate auto insurance will also play a role in how AVs are insured.
Some states are no-fault states, which means insurers pay the injured party in a car accident, regardless of who is to blame. Other states are at-fault, meaning the party responsible for the accident pays.
That critical difference could dramatically affect what insurance coverage for an autonomous vehicle looks like in one state versus another.
“But somebody is still going to be liable,” said attorney Karen C. Yotis, content manager for insurance on the Practical Guidance Team for LexisNexis®. “It’s a brave new world out there,” she added.
States are actively trying to shape that brave new world. At least 17 of them have introduced 70 bills dealing with AVs this year, nine of which have been enacted. Much of the legislation addresses insurance requirements for such vehicles, including enactments in Alabama (SB 226), Florida (SB 76) and Kentucky (HB 7).
Still, the existing auto insurance industry sees itself as critical to adapting to a world of fully autonomous vehicles.
In a 2021 update to its 2018 position paper on the topic, the Travelers Institute, the insurer’s public policy division, wrote: “Auto insurance as we know it today, can—and will—meet society’s needs in an AV world.”
The Institute argues that the current auto insurance structure “compensates victims quickly, fairly and efficiently, especially when compared to other risk transfer mechanisms,” such as the product liability model, which “could force consumers and victims to pursue complex, lengthy lawsuits to seek compensation.”
Using the existing system also “minimizes consumer confusion,” owing to vehicle owners’ familiarity with the basics of that system, such as how to buy coverage and file claims. In addition, the current system has “a robust legal and regulatory infrastructure with proper, comprehensive consumer protections in place to govern insurance providers and policyholders,” and the system can “adapt more effectively than alternative structures to the evolving regulatory and legal environment by creating or enhancing insurance products.”
The Institute’s insistence that the current auto insurance system is the best way to move forward with AVs hints at just how radically such vehicles could change things, if regulators are so inclined.
“They don’t need to reinvent the wheel,” Yotis said. But, she added, “there are other things to consider when a human isn’t driving.”
So, there’s still a lot to be determined—and the insurance industry will be watching. Closely.
—By SNCJ Correspondent BRIAN JOSEPH
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