Ten years ago, the mention of “driverless cars” would have prompted flashbacks to The Jetsons or Back to The Future. The concept of an autonomous vehicle (AV) navigating city streets or carrying a family down I-95 seemed out of reach, if not impossible. Fast-forward to 2015, when the first passenger rode in a fully self-driving Google vehicle on public roads. The vehicle carried Steve Mahan, a legally blind man from Santa Clara, California, on the streets of Austin, Texas. Great Scott! This accomplishment is one that even Doc Brown and George Jetson would call revolutionary.
Today, the biggest names in the automobile and technology industries are racing to be first in the autonomous vehicle market. The driverless car phenomenon is approaching quickly, and its e ects are unavoidable. This means drastic changes are coming to the way consumers get around. This movement is worrisome to the many people who do not want to place their safety in the hands of a computer.
However, many advocates for AVs argue that this new technology could help ameliorate the negative safety impacts of social media, smartphone use, and other distractions. Mobile devices and the ever-rising rate
of Internet engagement have become as dangerous as drugs and alcohol when it comes to driver impairment. According to a McKinsey & Co. report, AVs are estimated to reduce traffic accidents by 90 percent. Riding in a car with no one at the wheel—perceived by some as a novelty — may in fact be the most significant development in driver safety that the industry has ever seen. However, fully-autonomous cars are not yet available for purchase, and we do not know how quickly they will become a reality.
In a future driven by autonomous transportation, liability becomes incredibly complicated. Picture this: your new driverless car is chauffeuring you around and arrives at a four-way stop. You proceed into the intersection at the same time as another human-driven vehicle and you collide, damaging both vehicles. Who is liable for all of this damage? If the blame falls on your car, does your insurance cover the costs? Is the car manufacturer responsible? Do you even have car insurance, in this new model of driving? “Drivers” may question why they should have to pay for damages if they weren’t personally navigating the car that caused the accident. Manufacturers may claim that their vehicles will be able to avoid all accidents and will always make choices that are superior to those of human drivers – the elimination of human error, after all, is a major selling point of this technology. If the car is at-fault in an accident, then, it may be assumed that the technology failed. If so, how will carmakers handle this?
All of these are valid questions, given the rapid approach of AV technology. Autonomous driving creates an unprecedented liability debate that will prove to be complicated and di cult to resolve. As these technologies become mainstream, consumers will need to stay informed about the risks and implications of driverless transportation technology.
Consumer opinions on driverless car technology and liability are a good barometer for what consumers may want liability to look like in the future.
An Insurance Information Institute (III) report found that 55 percent of consumers would not ride in an autonomous vehicle, 43 percent would, and 2 percent are undecided. This survey represents the apprehension and hesitation of consumers regarding autonomous vehicles that manufacturers will have to overcome. Further, 50 percent believe that car manufacturers should bear the responsibility in the case of an accident. The other 50 percent of these voters provide an interesting insight into consumer opinions of AV technology. 24 percent of voters believe the car owner should be held responsible, 11 percent think it should be the car insurer, 9 percent answered the “car occupant”, and 2 percent are undecided. Some survey takers may consider “car owner” and “car occupant” as the same thing; however, these voters may also consider the prospect of shared autonomous vehicles in which the “car occupant” is not the owner, but merely a rider. As ride-sharing companies like Uber and Lyft pour money into AV technology, these “car occupants” will be much more common. Regardless of these differences, half of those polled believe that manufacturers should be held liable, which is more than enough reason for car companies to consider the cost of insurance as they roll out new and expensive autonomous vehicles.
Auto manufacturers and technology developers will have to consider whether their vehicles meet an adequate safety standard and their technology is reliable. This is not a cheap endeavor, and if manufacturers expect to bear the liability for their vehicles, they will likely factor that cost in to their sales prices. Consumers may face a disproportionately high price tag for driverless cars, relative to what they pay for cars now. However, car buyers may not be ready to face this reality. In the same report, the Insurance Information Institute found that only 25 percent of consumers would be willing to pay more for a driverless car to cover the manufacturer’s liability. Further complicating this issue is the fact that self-driving vehicles will already cost more than conventional cars, because of the high costs of research, development, and manufacturing. Current semi-autonomous features have reduced accidents, but the cost of these technologies is so high that the total dollar amount of insurance claims is actually increasing. III reports that the frequency of property-damaging accidents is decreasing at a rate of 1.6 percent per year while the size of claims is increasing at almost 6 percent annually. Therefore, if manufacturers are forced to pay for claims, they will most likely defray their costs by demanding a premium for autonomous vehicles. The extent to which liability impacts the price of AVs will largely depend on insurance policies and how the government chooses to regulate this complex problem. Specific, active change has not taken place regarding insurance for driverless cars, but there are frameworks in place and serious discussions for policies moving forward.
In September 2016, the National Highway Traffic Safety Administration (NHTSA) and the Department of Transportation (DOT) issued a “Federal Automated Vehicles Policy” that provided guidelines for the development and adoption of autonomous vehicles. The guidance addresses insurance and liability as a part of the “Model State Policy” which notes that, in regards to AVs, “States retain their traditional responsibilities for vehicle licensing and registration, traffic laws and enforcement, and motor vehicle insurance and liability regimes.” According to the document, the policy’s objective is “to ensure the establishment of a consistent national framework rather than a patchwork of incompatible laws.”
In other words, states will maintain their autonomy over car insurance practices, but they must collaborate to reduce complications between states. The current car insurance framework virtually eliminates any confusion over liability regardless of the state in which an accident occurs. However, AVs create a more complicated situation of liability, and if states do not promote consistency, consumers may face costly headaches. AV manufacturers and technology companies will prefer a consistent framework as well, to reduce the cost and complexity of their product planning state-by-state. Typically, regulation lags technological innovation, but in this case both the AV industry and government regulators cannot afford to move slowly. The Federal Automated Vehicles Policy also notes that insurance and liability changes could have a significant impact on prices, and it suggests that states form AV regulatory committees to ensure that car insurance remains stable and fair.
States will bear the primary responsibility for the future of driverless car liability and insurance. They must balance the unique needs of their own localities and citizens with the need for a consistent and reliable framework across state borders. While concrete policies are not yet in place, as driverless technology becomes readily available, these policies will soon follow. In light of this debate, another question looms: Will car ownership be worth it in the future? Or, will AV ride-sharing companies be sufficient to meet all of our travel needs? Based on consumer sentiment and policy development, it seems that the question of ownership and the debate over liability are fundamentally connected. Thus, state and federal regulation will not only affect what consumers pay for cars, but also how they interact with them.