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Thursday, 17 November 2016

Autonomous Vehicles: The Wheel Deal


Will we still need insurance when cars drive themselves?

One of the current innovations of the automobile industry is the development of the driverless car. Think the “Johnny Cab” automated taxi driver in Total Recall, or Tom Cruise’s mass transit system in Minority Report. Toyota, BMW, Tesla, Nissan, Google and a host of other companies are preparing to introduce robotic vehicles by the year 2020, or even as early as 2018. While they may not be exactly what popular media predicted, they will most certainly bring about changes to the auto-insurance industry and the way we travel.

So if I’m technically not driving the car, will I still need insurance?
In short, yes. Insurance is the transfer of risk from a driver to a company. In the case of an accident, insurance companies will cover specific damages. Operating an autonomous vehicle (AV) would just shift the liability more from the individuals to the car manufacturer. There will still be a need for theft, personal and physical damage insurance for the Demolition Man car.  
                                                                                                                 
                                                                                                                           
How will autonomous vehicles affect my premium?

It depends. New drivers today might be spending upwards of $4000-$6000 for insurance yearly, and this may very well go down. Instead of rating the driver’s skill, insurance companies will judge car conditions and safety. This change will transform how the automobile insurance industry operates. In the future they may serve a few key manufacturers instead of individuals, similar to insurance for cruise lines and shipping companies.
 
Insurance premiums will also vary depending on the different levels of car automation. The former Society of Automotive Engineers determined five levels detailing how much control an AV has. This will complicate insurance premiums because there will be a varying amount of liability on the driver.

How will driverless cars change society?
Unless the cars become self-aware and threaten our very existence, there are multiple benefits of AV beyond the prospect of lower insurance premiums. We can look forward to:

  1.  Fewer accidents. When you remove the human factor there is 90% less likely  chance of error.
  2.  Less traffic. Congestion may be decreased from the efficiency of these cars.
  3.  Increased transportation for the elderly and disabled. Driverless vehicles will  increase access for those who couldn’t previously drive.
  4.  Better fuel efficiency contributing to less pollution and there will be less need for large parkades where potential.
  5.  More time to do as we please during travel (read, text, sleep) whatever!

That seems like a future we are willing to drive towards.




Marchella Marfrica
Communications Specialist
Sharp Insurance

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