As Self-Driving Cars Hit the Road, Innovation Is Outpacing Insurance
As Self-Driving Cars Hit the Road, Innovation Is
Outpacing Insurance
By ANN CARRNS JULY 3, 2016
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.”
A version of this article appears in print on July 4,
2016, on page B3 of the New York edition with the headline: As Self-Driving
Vehicles Hit the Road, Innovation Is Outpacing Insurance.
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