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As Self-Driving Cars Hit the Road, Innovation Is Outpacing Insurance
Advances in self-driving car technology have gotten ahead of insurers’ ability to factor the systems into auto premiums.
So
at least for now, coverage for cars using self-driving technology works
the same way as coverage for traditional vehicles, according to the insurance industry.
A recent fatality involving a Tesla
Model S electric sedan using the company’s Autopilot system has focused
attention on the risks of new “autonomous driving” technology. But the
insurance claims process for cars using the systems generally works the
same way as for cars without them, said Robert Hartwig, president of the
Insurance Information Institute, an industry group.
That
is, when an investigation of the accident is completed, the insurer of
the driver at fault pays for injuries and damage to the others, up to
the limits of the policy. (Mr. Hartwig said he was speaking generally,
and was not privy to the details of any applicable insurance in the
Tesla accident.)
While
there is a potential question about whether the driver or the software
was at fault, he said, in practice the insurer would typically pay the
claim and then have the right to “subrogate,” or file a claim against
someone else, like the manufacturer or another insurer, to recoup its
payment. (There is no exclusion in auto policies for software defects,
he said.)
Khobi
Brooklyn, a Tesla spokeswoman, said in an emailed statement that the
company’s Autopilot system “does not turn a Tesla into an autonomous
vehicle and does not allow the driver to abdicate responsibility.”
Tesla
markets its cars to the public, and drivers generally must carry
state-mandated minimum liability insurance, which pays for damage to
other people, cars and property. (New Hampshire is the sole state that
doesn’t require liability coverage.)
However,
Mr. Hartwig said, insurers may not know they are providing coverage for
a potentially self-driving car. Generally, the owner of a new car
contacts the insurer to request a quote for coverage. The owner
typically provides the vehicle identification number, which identifies
the specific make and model of the car — in this case, a Tesla Model S.
But the identification number would not necessarily inform the insurer
of the various options chosen on the car, Mr. Hartwig said, or whether
the owner had activated the Autopilot software.
Insurers are likely to begin inquiring about those details more often, he said.
Paul
Grieco, a lawyer representing the family of the deceased Tesla driver,
Joshua Brown, said on Sunday that Mr. Brown had a “standard” auto insurance policy covering the Tesla, but he declined to identify the carrier.
Mr.
Brown, 40, of Canton, Ohio, was killed on May 7 when the Tesla he was
operating collided with a tractor-trailer in Williston, Fla. Tesla has
confirmed that the Autopilot feature, which the company described as
being in a “public beta” test, was activated before the crash.
Florida authorities and the National Highway Traffic Safety Administration are investigating.
There are proportionally few cars with self-driving features currently on the road, so the issue is a new one. Fewer than a dozen states,
including Florida, have enacted regulations specifically addressing
self-driving cars, according to the National Conference of State
Legislatures.
Many
truly self-driving cars are part of fleets being tested by auto
manufacturers or companies like Google, rather than cars sold to private
buyers. Such companies typically self-insure or carry special fleet
insurance that applies if the cars are involved in an accident, said
Hilary Rowen, a lawyer with Sedgwick in San Francisco who represents
insurers.
Features
like Tesla’s Autopilot, Ms. Rowen said, should really be considered
driver-assisted systems, rather than true self-driving technology, which
allows the driver to be a mere passenger. Tesla’s system is a
sophisticated combination of various driver-assist features, she said,
but Tesla warns drivers to “keep their hands on the wheel and eyes on
the road.”
Mr.
Hartwig said it was too soon to say how self-driving systems would
affect insurance rates. “The technology is so new that there’s not a lot
of actuarial data” to determine whether it significantly affects the
frequency or severity of accidents, he said. Insurers, as they have done
with other advances, from seatbelts to newer features like airbags and
rollover prevention systems, gather information over time and adjust
rates to reflect the impact of the changes, if warranted, he said.
But
the very nature of self-driving technology may make it challenging to
apply data from the cars to insurance premiums, Ms. Rowen said. “This is
going to be a disruptive technology for the insurance industry,” she
said. That is because computer software running the systems is
continuously updated. So while insurers generally track trends with a
certain make and model of car, the safety performance of an individual
self-driving car may actually change over time, as software updates
correct problems.
These
issues will probably take as much as a decade to sort out, she said. In
the future, during the claims process insurers may seek data from more
sophisticated versions of black-box recorders to shed light on the cause
of an accident. “Is it a driver problem?” she asked. “A software
problem? Or some sort of muddle of the two?”
The Insurance Information Institute, in a report last year on self-driving cars,
said the industry must study whether accidents with autonomous cars
lead to more product liability claims, in which drivers blame carmakers
or suppliers for accidents, rather than their own driving behavior.
“Liability laws might evolve,” the institute noted, “to ensure
autonomous vehicle technology advances are not brought to a halt.”
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