Insurance and driverless cars – where next?

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The introduction of driverless cars is fast approaching, with a number of tests underway in cities across England.

The transition to an entirely autonomous fleet of vehicles on UK roads will take a decade or more. But motorists are likely to have the option of buying fully autonomous cars within the next two to five years. Accordingly, the government has announced proposals relating to a rolling programme of regulatory reform that will clarify issues of liabilty

We asked Kate Sweeney, head of personal injury at law firm Stephensons, to explain the implications for car insurance…

Focus of reform

The focus of such reform will be on the changes needed to enable the use of ADAS (advanced driver assistance systems) and automated vehicle (AV) technology.

The UK’s current insurance model is based on the driver rather than the vehicle, so it’s clear that change is needed – and quickly – if the UK is to continue to be at the forefront of automated vehicle technology.

The government’s key policy objective is to ensure that drivers of AVs are correctly insured so that victims of accidents involving AVs receive compensation quickly and in compliance with the EU Motor Insurance Directive.

They intend to do this by extending compulsory motor insurance to driverless cars by way of a “single insurer” model – a policy which will cover both the motorist when they are driving and the car when it is in driverless mode.

Making a car insurance claim in today’s world is often fraught with difficulty, so once you add the complex and unchartered territory of accidents involving artificial intelligence, the liability issues and potential for complication are increased exponentially. 

Single insurer model

The government hopes that, with the introduction of a single insurer model, an innocently injured victim will have quick and straightforward access to compensation, regardless of whether they were injured while the AV technology was active or inactive.

It is anticipated that there will be specific situations when the insurer will not be liable, such as if the crash resulted from unauthorised modifications or updates made by the motorist to the vehicle’s operating system, or from failure by the motorist to install required software updates.

However, an insurer will be unable to avoid paying compensation to a victim if the accident is a result of the AV technology being hacked. Where the manufacturer of the vehicle is found liable, the insurer will still be required to pay out, but will be able to recover against the manufacturer under our existing common law and product liability laws.

Chris Grayling, transport secretary, said: “Automated vehicles have the potential to transform our roads in the future and make them even safer and easier to use, as well as promising new mobility for those who cannot drive.

“But we must ensure the public is protected in the event of an incident and this week we are introducing the framework to allow insurance for these new technologies.”

Cheaper premiums?

It’s currently unclear how much such a policy would cost, and early indications from the insurance industry are that such policies will be initially expensive.

However, driverless cars are safer than those piloted by humans, so it appears inevitable that over time, as the market settles, such policies should reduce in cost due to a reduction in the number of accidents.

So those unfortunate enough to be involved in a collision with an autonomous vehicle should find themselves better protected. And perhaps we’ll all enjoy lower insurance premiums?


Kate Sweeney is a partner and head of personal injury at law firm Stephensons

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