Who is Liable for a Driverless Auto Accident?

by | May 15, 2020 | Auto & Home

Insuring Driverless Cars

Once imagined as part of a distant future, autonomous vehicles are now beginning to rise in prevalence. However, as with most new technologies there are always issues that arise, and insuring driverless cars is not an easy feat.

For most of us, self-driving cars seem unreal and even irrelevant to our daily lives. Yet, these futuristic new vehicles will start to have a lasting effect on the insurance industry fairly soon.

While there have been incredible leaps and new aesthetics in automotive technology, there have also been viral mishaps along the way. Tesla having four “verified” autopilot-related deaths over the last four years, and in early 2018, a pedestrian was killed by a driverless Uber Volvo in Tempe, Arizona.

So while these automated vehicles are growing in popularity, the question arises, “without a live driver controlling the wheel, who is held liable when a self-driving car is responsible for an accident?”  The answers are not black and white - definitely shades of gray.

What Happens When a Car Drives Itself?

Traditionally, auto insurance has followed the driver, regardless of what vehicle they’re driving. When the car is driving itself, this paradigm is completely disrupted. Insuring automated vehicles comes down to a basic question of what it means to drive, and as far a insurance liability is concerned, the answer is not clear-cut.

One thing is certain, automated car manufacturers are working quickly to resolve their issues, while promoting a positive perception that these vehicles are safe and “road-ready.”

The Liability and Challenges

Advocates for self-driving cars claim in the long run, mass adoption of the technology will dramatically reduce accidents and insurance premiums. While that may be true one day down the road, autonomous vehicles are still very much a current work-in-progress, and as the Arizona accident indicates, are far from perfect.

While the Tempe, Arizona accident has resulted in some companies temporarily scaling back of their self-driving car programs on public roads, it is inevitable that the demand for self-driving cars will continue to grow in popularity, which means production will continue to expand.

Determining Fault

Current auto liability laws were not written with self-driving cars in mind. In most cases where a driver hits a pedestrian and fails to brake, the liability would most likely fall on the driver.

At the present time, self-driving cars are required to have a “backup driver” behind the wheel to take over in the event of an emergency, in order to avoid an accident. But we can imagine it would be easy for backup drivers to “let their attention wander elsewhere,” which can lead to accidents. In fact, video footage from the Arizona crash, for example, shows the driver looking down at her lap just prior to the accident.

There are currently 29 states plus Washington, D.C. that have enacted legislation related to autonomous vehicles. The generally accepted interpretation is that the person who started the vehicle with the intent to drive is the operator.

Multiple Companies Involved

In addition to the backup driver issue, another challenge affecting liability in such crashes is understanding how complex the technology itself is. The software and hardware is supplied by dozens of different companies, meaning that placing liability on the car manufacturer for issues that arise may not be so straightforward. Presently, insurers are treating self-driving cars the same as they would treat any other vehicle. However, it seems inevitable that the insurance industry will have to change its liability rules as self-driving cars expand.

One way that greater clarity on the issue could be achieved is through the courts. Unfortunately, accidents involving self-driving cars have, so far, all been settled outside of court. For example, Uber and microchip developer Nvidia Corp settling with the family of the deceased pedestrian within 10 days of the accident in Arizona. By settling out of court, companies who may be liable for a self-driving accident avoid the risk of a judgment going against them. However, such out-of-court settlements also make it hard for a precedent to be established concerning who is actually at fault in such accidents.

The Short Term Situation

Until courts adjudicate otherwise, insurance will continue to be held by the owner of the car, no matter whose hands (if anyone’s) are on the wheel.

The Long Term Need

According to Bankrate.com’s senior economic analyst, Mark Hamrick, he says there’s going to be an epic battle” among lobbyists and trade groups trying to spread the risk around among manufacturers, insurers, car owners, municipalities, and others. Much of this, Hamrick explains, will be determined by legislation at state and federal levels.

“Ultimately, the courts will need to determine with whom the liability rests, and it could take a decade or more for that to happen,” Hamrick says. “Everyone is going to point fingers at the other guy. It’s going to come down to who has the best hold-harmless agreement, and who has the best attorney arguing in court.”

Will Premiums Decrease?

According to Hamrick, he says “things are only going to get better for consumers, both in terms of insurance prices and car prices.”  And while car prices not expected to plummet, self-driving cars, along with the proliferation of ride-share services like Uber and Lyft, mean that fewer people will need to own cars, which should make coverage less expensive overall.

Currently, the average cost of car insurance for a Tesla is approximately $4,300 per year in the U.S. This price, of course, depends on the model and design, where you’re located, the amount of coverage you choose to purchase, and your driving record.

“In the past, families bought a car for their kids as soon as they turned 16, but that is ceasing to become a necessary option,” Hamrick explains. “Self-driving cars, for example, could potentially take you to work on one side of town, and then swing back by the house and take your kids to school on the other.”

If autonomous technology works as envisioned, the number of accidents on the road should decrease dramatically. Since most accidents are caused by human error, the current thinking is when you remove humans from the equation, accident totals should fall.

As such, the people with the highest premiums in the future might very well be those who want to drive the “old-fashioned way.”


The Balance
ABA Journal
Insurance Journal
Featured Photo Courtesy of AutomobileItalia, Flickr

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