It is no surprise the landscape of transportation is drastically changing. With the advancements in technology, vehicles are becoming autonomous. Consumers will soon have the option to buy a vehicle they will not need to actually drive. Also, people looking for transportation to travel from one place to another no longer need to call a traditional taxi service. Individuals can now take advantage of one of the many ride-sharing or peer-to-peer programs available on their smartphones. Autonomous and semi-autonomous vehicles are at the forefront of technological development in the automobile industry.
Programs such as ride-share and peer-to-peer programs that involve the use of autonomous vehicles create a new set of insurance issues. For example, Avis Budget Group has recently announced it has partnered with Lyft to provide Avis Rental Cars to Lyft drivers. Also, Kroger is testing the use of driverless cars to deliver groceries. Examples such as these can create multiple layers of coverage issues for autonomous and semi-autonomous vehicle manufacturers, owners, renters and drivers.
Insurance Carrier Issues
Insurance carriers are determining whether to create new types of policies to cover the liability issues attached to the different levels of autonomous vehicles. Vehicles with levels 1 and 2 autonomous components are those that have features of self-parking, blind spot detection, and lane departure assist. These vehicles are on the road today. Vehicles with levels 3, 4, and 5 are not expected to be used by consumers until 2025-2035.
Insurance carriers are also considering whether to modify existing coverage and create new types of policies to cover liability posed by new government insurance requirements. Such new requirements are on the rise. For example, the Pennsylvania Department of Transportation’s Automated Vehicle Testing Guidance requirements mandate a highly automated vehicle testing applicant certify the applicant complies with the requirements of chapter 17 of title 75 of the Pennsylvania Consolidated Statutes relating to financial and insurance responsibilities. Michigan enacted a statute which applies to autonomous vehicles. The law requires that a “manufacturer shall insure each vehicle in a participating fleet as required under this act and chapter 31 of the insurance code of 1956…” and that “for each SAVE project in which it participates, during the time that an automated driving system is in control of a vehicle in the participating fleet, a motor vehicle manufacturer shall assume liability for each incident in which the automated driving system is at fault, subject to Chapter 31 of the insurance code of 1956…” This statute requires the manufacture to obtain insurance that covers instances when the vehicle is under control of the autonomous system and is at fault for an accident during a SAVE project.
Existing policies and future coverages may have to be changed to cover issues posed by autonomous vehicle used in ride-sharing services. For levels 1 and 2 autonomous vehicles, insurance carriers could develop a separate policy section or provide temporary or short-term coverage for ride-sharing and peer-to-peer programs (i.e. hours, days, or weeks while the vehicle is used.) Currently, insurance carriers are offering several types of nontraditional insurance policies. Some carriers provide rideshare insurance to rideshare companies. Carriers offer “nonowned” car insurance to employees for when employees use personal or peer-to-peer or ride-sharing vehicles for employer businesses.
Unique coverage issues exist for level 3 autonomous vehicles. (The National Highway Traffic Safety Administration describes level 3 as a totally autonomous vehicle where the driver is a necessity but is not required to monitor the environment and must be ready to take control of the vehicle at all times with notice.) One such issue is coverage for inattentive drivers who fail to notice the need to take over the vehicle or who are negligent in operating the vehicle after taking over control. Level 3 autonomous vehicles will likely require some degree of hybrid coverage for product liability issues and traditional tort-based coverage for operator error or other negligence issues.
Levels 4 and 5 autonomous vehicles pose different insurance issues. (NHTSA describes these vehicles as high automation for full automation with the driver having the option to control the vehicles.) One such issue is whether ride-sharing and peer-to-peer companies will need to still maintain coverage in instances where it is alleged that proper instructions or warnings with regard to taking over control of the vehicle were not provided.
Uniform Autonomous Vehicle Insurance Statute?
The NHTSA has strongly encouraged the states to allow it alone to regulate the safety, design, and performance aspects of autonomous vehicles to avoid conflicting federal and state law. However, states have already enacted laws with regard to different issues of autonomous vehicle testing and implementation. States will most likely also enact legislation with regard to insurance coverage for issues relating to autonomous vehicles. One can envision, though the enactment of a uniform or model autonomous vehicle insurance statute to provide consistency.
Given problems related to autonomous vehicles such as system and equipment malfunctions, operator errors, and collisions will be on the rise, insurance carriers will need to provide for sufficient and new coverage. This is particularly important for autonomous vehicles in the ride-share and peer-to-peer programs. Autonomous vehicles in these programs must be sufficiently insured.