Home Featured Insurance How Will Insurance Work For Driverless Cars, There Are 4 Ways Self...

How Will Insurance Work For Driverless Cars, There Are 4 Ways Self Driving Cars For Insurance Industry

144
0
Open source image

Driverless cars are yet to hit UK roads, but there’s already talk of how they’re likely to change car insurance. Check out our guide to automated vehicles and the impact they could have on insurance premiums in the future.

Driverless cars are vehicles that don’t require a driver. Instead, an artificially intelligent (AI) computer is programmed to take the wheel and get you safely to where you need to be. Driverless cars are sometimes known as autonomous vehicles.

While true self driving cars are still years away from becoming commonplace, there are a lot of questions surrounding how these vehicles will function. Insurance companies are also throwing their hat in the ring on this topic, as insurers aren’t sure how they’ll set up their policies.

4 Ways Self Driving Cars Will Affect The Insurance Industry

To account for cars that need little to no driver input, insurers have raised complex questions about how to exist in a driverless world. 

Here are some insurance predictions to consider.

1. Comparison Websites Will Start Showing Driverless Car Policies

The car insurance landscape is very “dog eat dog,” as multiple insurance companies have to compete with the market rate. For example, if you want cheap car insurance, you can head over to cheapinsurance.com, who will find you quotes below the market rate if you’re a good driver.

However, in a landscape where self-driving cars are present, insurance companies have to offer driverless car policies, or they risk getting “eaten” by the bigger companies that opt-in early.

The adoption of self-driving cars will be slow over the next few decades, but the minute it ramps up, there are going to be companies that don’t offer driverless insurance. Out of necessity, these policyholders will jump ship to other insurers who do offer insurance as a multi-tiered option.

2. Automakers Will Assume Liability Out of Fairness to the Driver

According to the National Highway Transportation Safety Administration (NHTSA), 94% to 96% of all accidents are caused by human error. That means self-driving vehicles could virtually eliminate fatal car accidents. But if that’s the case, would insurance even be necessary?

Insurance isn’t available to a policyholder because of how likely an accident could happen; it’s a safeguard for when it does happen. There’s still a 4% to 6% chance of an accident happening.

However, drivers wouldn’t be fond of a policy that charges them high fees per month when they’ll likely never have an accident. To account for this, most experts assume the onus will be on the automakers in most cases unless they can prove the accident was caused by the driver.

3. Premiums Will Drop Significantly As Accidents Become Rarer

Ever since Waymo put the first driverless car on the road, insurers have thought about how to price their policies. It isn’t an easy question to answer, considering accidents will become very rare eventually. That’s a good thing, as thousands are killed in car accidents every single year.

With that said, insurers will still see hiccups while the world is switching to self-driving cars. It’s also predicted that some people will still drive non-automated cars due to costs or preferences.

As far as premiums go, there’s a prediction that they’ll drop significantly within a 30-year time span, as insurers already offer premium discounts for self-driving features. For example, if you have an advanced driver assistance system (ADAS), your premiums will be reduced.

4. The Insurance Industry Will Struggle From Reduced or Drop Coverage

We can’t stress enough how crucial full coverage auto insurance is for your vehicle and wallet. However, most people don’t actually buy full coverage auto insurance. Drivers usually stick to minimum coverage because it’s inexpensive and often required by their state. 

Full coverage insurance, despite its necessity, is already made irrelevant by the drivers themselves. Once self-driving cars take off, there’s a possibility full coverage won’t be offered.

That’s because experts predict mandatory coverage regulations won’t apply to self-driving cars because the risks are so low. If that’s the case, the car insurance industry will have to pivot or die out completely. Fortunately, the industry has at least a decade to adjust to these changes.

5 Things You Didn’t Know You Could Do With Your Smartphone

Previous article5 Things You Didn’t Know You Could Do With Your Smartphone
Next articleThe Metaverse, The New Technology Revolution