Over the past few years, automakers have added more and more high-tech safety equipment to their cars. Even affordable vehicles now have lane departure warning systems, automatic braking systems, and ever more complex radar-guided cruise control that can not only control the speed of a vehicle but also maintain a set distance to the car in front. This is not to mention all of the self-driving or partially self-driving systems that are becoming common on certain luxury cars.
All of these systems, however, are very expensive. Whereas a repair of front-end damage on an older car without complicated electronics might cost a couple hundred dollars, the newest vehicles might have replacement costs into the thousands.
That’s according to Bob Tschippert, senior vice president of insurance underwriter Risk Theory. Tschippert told Automotive News, “In the past, if you had a front-end collision, you had damage to the engine or the front end. But now, with the number of airbags that can run from $1,000 up to $4,000 and all the sensors up front, you’re seeing more totals.”
The consequence of these safety innovations, which undoubtedly reduce auto accident fatalities and injuries, is that newer cars are more likely to be considered a total loss by the insurance company in the event of a collision. This trend is likely to continue, as these vehicles depreciate and hit the used market. The phenomenon may lead to less choice and higher prices for consumers looking to buy a used car, and may lead to higher insurance rates as well. The main question is whether insurance companies will consider the safety benefits of these technologies in preventing injury to outweigh the higher costs brought by repairing these technologies. That balance will affect where auto insurance rates go from here.
Further complicating the issue is the thorny question of liability when it comes to the ultimate iteration of safety technology – self-driving cars. These vehicles are loaded with even more expensive sensors and equipment, but they are theoretically immune from at-fault accidents. If an accident does occur, the question of who is liable (the manufacturer, who developed the systems) or the driver (who was not “driving” the autonomous car at all) will determine what vehicle owners of the future pay for car insurance.