Auto Insurance

Lexus RX450h retrofitted by Google for its driverless car fleet.
Image Credit: Driving_Google_Self-Driving_Car.jpg: Steve Jurvetson, derivative work: Mariordo

Great news! Self-driving cars are going to be a real thing! Not so great news! You’re still going to need auto insurance. Don’t kick your coverage to the curb just yet; there are a lot of things that need to happen before you can kiss that payment good-bye. Here’s a breakdown of hype, hysteria and a big shot of common sense about the self-driving car hoopla.

Better Cars Mean Better Outcomes

Nobody’s arguing that people involved in accidents have a better chance of survival if they’re in a late-model car as opposed to a 20 year-old road warrior. Fatalities in late model autos fell more than 30 percent over a three year period. Advances in safety technology such as blind-spot monitoring, lane departure warnings, and collision alarms are becoming more common even in mid-range autos. Advances in structural engineering mean that a teeny-tiny little Smart Fortwo car may actually be more structurally sound than a 1995 Volvo 850 station wagon, even if the insurance is much less for one than for the other.

The biggest factor in accidents is human error. By eliminating driver error, self-driving cars have the potential to be the biggest lifesaving innovation of the 21st century, saving around 300 thousand lives per decade and dropping the rates of injury to near zero, taking with it 90 percent of accidents and a public health cost of $190 billion dollars per year. The other ten percent of those accidents are going raise some questions.

What Happens When Self-Driving Cars Crash?

It’s a good question, and one that insurance companies are going to need to anticipate. Who is at fault in the event of a self-driving car being in an accident? Was it a defect in manufacturing? An error in the software? Was the road condition at fault or was there a natural disaster? Did some malicious person hack the car? Or, and this will be a question until all vehicles are self-driving, was the party in a human-driven vehicle at fault? While financial journalists write clickbait, the answer is that auto insurance is not leaving the equation, though the format may be different than you use now.

There will still be thieves who if they are not actually stealing your car could smash and grab what’s in the car such as a stereo system. Self-driving versus manned car crashes will still happen. Whether you own a self-driving car or use a service, you’re still going to need some type of coverage against the thing that you think will never happen actually happening. You, as a person, are still vulnerable and need to have a hedge against the unexpected. That’s what insurance coverage is for, and while self-driving cars might change the ways that insurance is packaged and sold, accidents and theft, vandalism and negligence are still factors. So don’t chuck that policy and grab the first self-driver that comes on the market, instead call your insurance agent and find out how to stay covered in a self-driving new world.