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We will be sharing the roadways with driverless cars before we know it. Did you know Texas recently passed a statewide law allowing the operation of automated motor vehicles?1 Under the law, “An automated motor vehicle may operate in this state with the automated driving system engaged, regardless of whether a human operator is physically present in the vehicle.”2
Driverless cars are being developed and tested by companies such as Uber, Alphabet, and General Motors, among others. Advocates promote autonomous vehicles, or AVs, as removing the “human error” component of driving, which accounts for accidents, injuries, and deaths. More than 37,000 lives were lost on U.S. roadways in 2016, according to the National Highway Traffic Safety Administration.
Distracted driving alone was a cause of more than 3,400 deaths in 2016. Tesla founder Elon Musk infamously observed that driving cars may even be illegal once the technology emerges to make automated cars safer than human drivers.3
Yet there have been setbacks. Uber stopped testing of autonomous cars in all cities after a pedestrian was killed by one of its cars in Tempe, Arizona, in March 2018.4 It has now shuttered its Arizona self-driving operation, laying off 300 workers.5 The AV momentum hasn’t seemed to stop, however. If AVs gain traction, will other institutions adapt?
Who pays when an accident occurs?
Today, drivers are required to have proof of financial responsibility up to minimum limits in case of an at-fault accident.6 This is typically satisfied by an automobile liability insurance policy, which must cover bodily injury or death and damage to the other auto or property of others up to the minimum amounts. Insurance companies handle post-accident claims, conducting an investigation and paying or denying the claims.
If a lawsuit is filed, the insurance company again has an important role to play in hiring and paying for an attorney to defend its insured (unless it has denied coverage). Traditional concepts of negligence apply—did the defendant maintain a safe speed/distance? Was a traffic violation involved? Did the other driver contribute to the accident?
Car or component manufacturers can also be defendants in car wreck lawsuits if an alleged product defect contributed to the accident. With fully autonomous cars, however, all crashes could theoretically be product liability cases in which the focus is on the design and/or manufacture of the product, not the user’s negligence.
It wasn’t me, it was the car.
Car manufacturers, including Volvo and Mercedes Benz, have signaled that they may assume liability for accidents involving fully autonomous cars.7,8 With the shift in liability from the driver to the manufacturer, major disruptions are anticipated in the auto insurance industry.
In a world of driverless cars, could individual policies become obsolete? Some think so. Others doubt that the states will do away with mandatory minimum coverage. Nonetheless, predictions that the individual auto insurance market will be obsolete may be premature. What happens when cars are being operated in semi-autonomous mode, where the driver still retains some form of control? Likewise, car manufacturers are not likely to assume all liability or be required to.
One can imagine scenarios where there are multiple fac-tors that could have caused the accident. Bad weather, a deer running in front of a car, or a tire blowout. Will there be any exceptions to assumed liability by manufacturers? Does this assumption of liability apply if both or all of the vehicles involved in a crash are autonomous? Or does it apply only where there is an autonomous car involved in an accident with a human-driven car?
Most difficult may be where there is a human “safety driver” as in the case of the Uber accident in March who reportedly was behind the wheel but apparently did not operate the vehicle.9 The Texas statute does not require a human operator but the law also requires that the “automated motor vehicle” is able to perform without any human intervention.10
Also at issue is pending federal legislation in the form of the AV Start Act, which would require that disputes between autonomous vehicle manufacturers and consumers be settled in arbitration and would bar consumers from participating in class-action lawsuits.11
Can you completely remove the human element?
Insuring an autonomous car essentially insures the technology. But while AV technology may take the human element out from behind the wheel, the human car owner is not out of the picture entirely. Will car owners affect the technology or safety of the car through failure to conduct regular maintenance?Will human drivers be able to control or manipulate the speed of autonomous cars or change safety settings? Who controls the route, the road conditions, and the visibility?
All of these factors have to be considered by human drivers before getting on the road. Is it the car’s “fault” if the decision is made to drive under unsafe conditions? Sensors and tracking devices may show a human error, or manufacturers may claim that the technology did not fail and the crash was simply unavoidable. Currently, no-fault insurance such as personal insurance protection, or PIP, is mandatory or optional. Drivers and passengers may continue to benefit from such insurance.
The proponents of driverless cars may argue they will reduce the risk of human error such that traditional personal injury claims from auto accidents will be a thing of the past. But computers also have a failure rate. Further, there will still be the need (perhaps more so) for accident investigations, a claims process, and payment. Car manufacturers are in the business of making cars, not handling claims. Thus auto insurers or third party administrators would presumably still be necessary. For example, Tesla recently partnered with Liberty Mutual Insurance to launch InsureMyTesla.12
New products, new issues
Driverless cars will likely result in the emergence of new insurance products. For example, cybercrime insurance emerged to deal with costly liabilities involving data and data breaches. Likewise, auto insurance may give way to insuring the technology and the breaches that will undoubtedly occur.
Nonetheless, data breaches caused by hackers typically result in financial loss. Hacking a car’s automated driving system could result in injuries and deaths.13 Such concerns point to moral and ethical considerations of the technology and indicate that human drivers and their personal liability insurance may not become relics.
In the meantime …
We may already be in a transition period. Assuming autonomous cars become commonplace, what about drivers who like to take that weekend drive to the country with hands on the wheel? What about consumers who are not convinced of the safety or ability of autonomous cars? Will auto insurance still be available for drivers if they choose to drive? We do not know the answers to such questions but we should be asking them before steering wheels become optional and we go driving off into the unknown. TBJ