Early this year, California lawmakers gave the go-ahead for 50 companies to test autonomous cars in the state without a person in the driver’s seat. The movement for fully-autonomous vehicles is evolving, increasing safety and benefits for drivers and pedestrians. Read along to learn more about the path to self-driving cars and what this means for you.
Self-Driving Cars: On the Road to Safety
In 2015, a shocking 35,092 people died in motor vehicle-related accidents in the U.S. alone. Ninety-four percent of serious crashes are due to human error, according to the National Highway Traffic Safety Administration(NHTSA). A study performed by the NHTSA in 2010 revealed motor vehicle crashes cost $242 billion in economic activity. Clearly, the cost of human-error vehicle crashes is high.
Several experts forecast self-driving cars will be on the road as soon as 2025, with fully-autonomous cars taking over by 2030. While much research is still needed, and the pros and cons of driverless cars is still debated, this is a growing trend that will have a major impact on personal vehicle insurance.
Self-Driving Cars and Vehicle Insurance
What does the future of autonomous vehicles hold, and how does that impact the everyday consumer? Harvard Business Review (HBR) predicts driverless vehicles won’t be owned by individuals but by auto manufactures, creating fleets that provide ride-sharing services. “Unlike individual car owners – whose vehicles typically sit idle most of the time — fleet owners can send autonomous vehicles out on multiple trips on a 24-hour basis, amortizing the cost of ownership,” according to HBR.
If this trend occurs, this could mean lower premiums for individual vehicle insurance carriers. The decrease in human error and the number of policies means insurance companies will require less each month. A study conducted by the Insurance Information Institute (III) found that 50% of consumers believe the autonomous car’s manufacturer should bear responsibility in case of an accident. Will the change to driverless cars shift the liability of driving from individuals to manufacturers?
Harvard Business Review believes the future for insurance companies in the future of driverless cars lies in three main areas: cyber security, product liability, and infrastructure insurance.
A main concern, protecting against technology failures and cyber security risks will be a major focus for autonomous vehicles. The probability and impact of hacking, hardware and software defects, and other risks is huge. HBR estimates insuring against these risks could generate as much as $12 billion in annual premiums.
The Future of Autonomous Vehicles
When it comes to the automotive industry, we are approaching a brave new world. The advancements in technology and changing trends means changes for everyone – from consumers, to manufacturers, to insurance companies. Preparing now will help us in the inevitable future of autonomous vehicles.