Cutting-edge technology will soon change transportation as we know it. Some experts predict that driverless cars will be ready to buy by 2020, according to the New York Times. The move will likely drastically alter the insurance industry. For consumers, insurance for driverless cars could mean cheaper quotes on auto coverage than ever before.
Insurance still necessary
Drivers are currently required to have a certain amount of liability insurance in most states, with minimum levels varying by state. In the future, the driverless vehicle’s owner will still bear the responsibility for getting it insured in case of accident.
The Insurance Information Institute, or III, predicts that with the transition to self-driving vehicles, insurance policies and rates will continue to hinge on the car owner’s location, accident history and the average number of miles driven daily. It also notes that the vehicle type and where it’s driven will likely affect the cost of insuring a self-driving car.
Changes are coming
Financial services research company Celent studied the potential effects of self-driving vehicles on liability auto insurance. It concluded that the emergence of self-driving cars, along with automated collision avoidance systems and other new technologies, could “substantially reduce traffic accidents and insured automobile losses.”
As a result, the Celent report, whose title refers to “the end of auto insurance,” estimates that insurance liability premiums will gradually drop to a very low level.
For years, one of the great mysteries about autonomous cars was how to build one that wouldn’t crash. Safely navigating busy highways, winding streets and roadside joggers are just a few of the obstacles for self-driving vehicles to overcome before they’re on the market.
It’s a gradual process, though. Improvements to car safety features have already led to blind-spot monitoring, collision alerts and advanced cruise control in cars we drive today.
Some industry experts predict that a 20% adoption of driver-assist technology will be enough to push insurance premiums lower long before self-driving vehicles are widely available.
According to the National Highway Traffic Safety Administration, human error causes more than 90% of all crashes, which, in turn, drives auto insurance rates up.
Controlled by sensors and software rather than human instinct and intellect, there are several points for autonomous vehicle software developers to sort through before they can gauge the appropriate reactions and responses.
For example, they’ll need to decide whether it’s more important to stop the car or to swerve if an object enters the roadway. Another dilemma is the type of crash impact driverless cars should anticipate.
Once these issues are sorted out, the number of accidents will most likely be reduced, thus lowering auto insurance premiums.
But not everything will be cheaper
While the cost of auto insurance is expected to go down, the III predicts the cost of auto repairs will increase. With new vehicles and new technology come a need for specialized auto mechanics, custom-manufactured replacement parts and the newfangled tools to repair and replace them.
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