Does self-driving car insurance exist?

  • Coverage clarity
  • Auto insurance
ariel view of smart cars driving on a highway in the city

Self-driving cars may be the future of commuting and some day may be as commonplace as the car in your driveway today. Your next auto policy may include insurance for self-driving cars. We’re not quite there yet, both in terms of vehicle autonomy as well as insurance considerations, but conversations are happening. Here’s what you need to know to join in.

Self-driving cars defined

According to the Society of Automotive Engineers (SAE), there are six levels of driving automation ranging from fully manual to a fully autonomous vehicle. 

In Level 0-2, the human is driving and in control of the vehicle at all times; they must steer, brake and accelerate.

  • Level 0 – Vehicle features provide warnings and momentary assistance. Cars at this level might include features like:
    • Automatic emergency braking
    • Blind spot warning
    • Lane departure warning
  • Level 1 – Vehicle features provide steering or speed support, but not both. These cars are likely to have one of the features below but would not have both.
    • Lane centering
    • Adaptive cruise control
  • Level 2 – Vehicle features provide steering and speed support. These cars would have the same available features as Level 1, but they would be able to incorporate both of these types of assistance.
    • Lane centering
    • Adaptive cruise control

According to their categorization, no car has gone beyond a Level 2.

In the higher levels, the human is not driving when using the features. This is true even if they are in the driver’s seat.

  • Level 3 – When the car requests it, the driver must take over and drive. Drivers must be ready for this possibility. These cars are in control in some conditions. If the conditions are not met, the car will not drive. Level 3 vehicles would have the following features.
    • Traffic jam chauffeur
  • Level 4 – Cars at this level will not require you to take over driving when the features are activated. However, if certain conditions are not met, they will not activate. Some examples of features at this level are below.
    • Local driverless taxi
    • Pedals and steering wheels may not be installed
  • Level 5 – These vehicles are fully autonomous and self-driving features can be used under all conditions. The features are the same as Level 4 but without any limitations.
    • Local driverless taxi
    • Pedals and steering wheels may not be installed

As new autonomous driving vehicle features are developed, the features for each level will need to be expanded.

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The current state of self-driving car technology

Automotive and tech companies have been promising self-driving cars for years but they’re proving difficult to program. Every day when you get into your car, you encounter new situations. You’re able to use your instinct and experience to react. Self-driving cars don’t have that ability. Every possibility needs to be known, and programmed for, in advance. Think of it this way: each individual situation a driver encounters is unusual and may never be experienced again by them or another driver. However, unusual situations as a whole are incredibly common and you never know which one the car will encounter. Self-driving cars need to account for all of these possibilities in advance, even if it’s something unlikely. The only way for a car to know how to respond to a duck riding a dog across the street without the right of way is for someone to anticipate that need and program the car with an appropriate action for it.

The evolution of auto insurance for self-driving cars

Until cars at a Level 4 or above exist, we can’t know the full auto insurance industry implications. There’s simply no way to know what risk will accompany features until the features are created and live. Cars like a Tesla (Level 2) won’t have self-driving car insurance per se, but there could be an increased cost due to more costly repairs after an auto accident. We’ve explored electric cars and what makes them more expensive to insure. Insurance for self-driving cars will likely work similarly.

That said, many newer cars do have self-driving technology features. Adaptive cruise control, steering assistance and lane-centering are all examples of a Level 1 autonomous vehicle. Driver assist features like a blind spot monitor or forward collision warning don’t bring a car up to a Level 1, but they are using features that are developed with a Level 5 in mind. The path to a Level 5 being available to the public is paved with these new features and innovations that are rolled out each model year.

All of that is to say, we don’t really have insurance for self-driving cars yet because we don’t really have self-driving cars yet, but your current insurance is already factoring in self-driving features and will continue to do so as they are introduced and made standard.

Autonomous car insurance considerations

There’s no way to know for sure. Each model year comes with new innovations and gets us closer to a Level 3, which will lead the way to a Level 4 and beyond. Regulations are usually developed in response to events or new technology that exists. It’s rare to have them created in anticipation of an advancement. Until we have the features to move us up an SAE Level, we can’t know what the future is for self-driving car insurance regulation.

That said, here’s some food for thought.

Insurance companies will need to consider the liability of self-driving cars and weigh it against the liability of manual cars. If you hold out and keep your Level 0, will you have greater liability because you don’t have a machine in control? Or would you pay more for it with a Level 6 because you’re subject to machine errors (hello blue screen of death!)? What about cyber security? Car computers are becoming more complex and reaching more areas of the vehicle. Will the software be an asset or a liability? On the one hand, it can make complex decisions quickly and without human emotions to do what is least harmful in any situation. On the other hand, it could be hacked in ways we probably can’t yet imagine.

These questions need to be answered before laws can be enacted, risks can be assessed and company regulations and algorithms can be created. Until a Level 5 is closer to reality, there’s no telling what might factor into insurance coverage and costs.

A possible future for self-driving car insurance

It’s hard to say. Much like electric cars, the cost associated with repairs and replacements is higher for these vehicles than non-autonomous vehicles. There will likely be a higher annual premium for self-driving car insurance because of these increased repair costs, but it’s possible that increase can be mitigated by researching repair and part replacement costs as part of your pre-purchase research. If you purchase a popular self-driving car with a lower cost for replacement parts, your insurance policy might reflect that and be closer to what you’re used to paying now. Buying a self-driving car might also change your insurance payment depending on which self-driving technology features you have. Some safety features result in lowered insurance costs because they are associated with a lower risk level. The only way to know if your costs will change for the better or worse is to reach out to an expert, like the VIU by HUB Advisory Team, and ask.

Self-driving cars are going through an exciting evolution. Each stage in this evolution comes with implications for insurance, laws and more. At the moment, no one can predict what to expect when we get to a Level 4 or Level 5 autonomous car. VIU by HUB is closely monitoring the development of these cars and how insurance carriers react. Keep an eye out for more from us, or other trusted sources, as the industry develops.

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