Automated cars are still being developed and tested on roads, but how insurance will work for these cars is currently buzzing and making lots of headlines on the internet. Though self-driving cars can take many years to become staple/common, there are some predictions on how they impact auto insurance rates or coverages.
How Will Automated Cars Impact the Insurance Landscape?
- Insurance Companies Will Start Offering Driverless Policies
The auto insurance industry is highly competitive, as there are thousands of companies around, and they have to compete with each other to be the preferred provider. In such circumstances, if driverless cars are going to be the future, insurance companies will consider offering driverless car policies earlier to retain and attract customers. Otherwise, the policyholders will switch to other providers who offer such policies earlier. - Automakers Will Be Mostly Liable for the Accident
According to the National Highway Transportation Safety Administration (NHTSA), human errors are contributing to 94-96% of accidents. This means automated cars will mitigate the possibility of accidents, so is insurance essential in that case?
Yes, insurance is necessary because it is not for how likely an accident can happen but for protection when it does happen. Even with self-driving cars, 4-6% of accidents can still happen. Nevertheless, vehicle owners won’t prefer a policy with high premiums when there are minimum chances of accidents. To account for this, insurance companies may make automakers liable for the accident in most cases unless they can prove the driver was at fault for the accident. - Premiums Will Decrease Significantly
Accidents will become rare with automated cars, so there will be a remarkable drop in premiums, as insurers already provide price cuts and discounts for cars with self-driving features and advanced driver assistance systems.
On the other hand, it is predicted that some people will still drive non-automated cars because of cost reasons or preferences, so their premiums will be mostly unchanged. - Comprehensive Coverage Will Become Rare
Once self-driving cars become common, insurance providers cannot emphasize the significance of having full coverage for a car. The reason is that mandatory coverage rules won’t apply to automated cars, as the likelihood of accidents is low. In such circumstances, drivers will mostly prefer to buy minimum coverage, as it is cost-effective and mostly required by their state. Eventually, insurance companies may face a loss due to a drop or reduced coverage.
These are just predictions, and insurance companies still have years left to adjust to these changes and make their landscape pivot. On the flip side, auto insurance is necessary for all car owners, whether they own automated or non-automated cars. The reason is insurance is not just for protection from accidents, but it is also for protecting your vehicles against theft, vandalism, fire, etc. So, you cannot completely avoid insurance in most cases.
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