Transitioning from conventional vehicles to fully driverless cars may only be 7 years away, but Car Insurance companies have already started thinking about the future of transportation.
Many studies have suggested that up to 90% of all accidents could be prevented by driverless vehicles. So why buy car insurance if self-driving cars make accidents less likely to happen?
As this reasoning makes the most logical sense, insurers are most likely to move away from covering the owners of the vehicle from the risk tied to human error and instead cover manufacturers against technical failures. This prediction also hints that people will end up covering themselves with medical and hospital insurance instead and cut out car insurance entirely.
So what does the future look like for Car Insurance companies?
Studies by Deloitte have shown that car ownership is making less and less sense to many people, especially to people living in cities. Consumers are unable to justify saving for an asset that depreciates and which stays idle for plus/minus 20 hours a day. With driverless cars approaching on a shared demand (Uber developing driverless vehicles), having your “first car” will soon become unknown.
So what will happen if you’re in an accident caused by two self-driving cars? Liability will be determined by the circumstances of the accident and on each person who is involved. If the accident is caused entirely by the vehicle then the manufacturer will be liable, if the accident is caused by both the vehicle and the passenger then it is most likely to fall on the insurer.
So is it necessary to take out car insurance for self-driving cars? Only time will tell as the answer isn’t clear just yet. There is still a lot of debate around the topic. Some suggest that premiums should be reduced by 75%, especially if the consumer is no longer driving the vehicle. The cost of insurance should ultimately be shifted from the driver to the manufacturer of the vehicle.
Does this mean that we are approaching the end of car ownership? Manufacturers now argue that when purchasing a driver-less vehicle, the consumer would be purchasing the license of the software of the car instead of the actual vehicle, as the car would have to be updated frequently and the consumer would be unable to make any repairs.
Not everyone will be excited by these technologies, and many are skeptical and disagree that we are at the tip of a transformation in transportation. Some still want to drive. Many may also argue that investment in public transport would achieve a better or similar outcome.
Whether you’re in favour of driverless cars or not, the reality is they are upon arrival (2020) and they will have socio-economic effects and other impacts on our society, but those issues we’ll face as we come to approach them. You as the market, in the end, will decide whether they’ll work or not.
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