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Auto insurance and the transition to self-driving cars

We appear to be at the start of a major transition here in the U.S. when it comes to automobiles. This is the transition from cars primarily being controlled by humans to cars being self-driving. There are already cars out on the road that have certain limited autonomous features (like automatic emergency braking), and it seems likely that the number of autonomous features available for cars will only increase in upcoming years.

The transition to cars being driverless is one that touches on some very fundamental aspects of cars. So, this transition is likely to have some big effects in all different sorts of areas. Among the things that could be heavily impacted over the course of this transition is the auto insurance industry.

Decreases in car accidents, shifts in where fault/liability lies in accidents and shifts in what the biggest property damage and injury risks are when it comes to automobiles are some of the things an increase in autonomous functions in cars could potentially lead to. These three things are all things that could have significant implications when it comes to auto insurance. They and the other impacts cars becoming self-driving could have could lead to many different changes when it comes to auto insurance, including changes in:

  • Typical premium levels.
  • What types of auto insurance policies are available.
  • What terms auto insurance policies typically contain.
  • What main things automobile owners are looking for when it comes to an auto insurance policy.

So, the transition period towards self-driving cars could be a time of great change and uncertainty for auto insurance companies. Times of change and uncertainty within a given branch of the insurance industry can bring about many things. Such times can pose some unique challenges. They also could potentially see an increased likelihood of disputes arising between insurers and policyholders as policies enter new and possibility unfamiliar territory.

What do you think will be the biggest challenges the auto insurance industry will face as cars transition towards becoming driverless? Are there any types of auto insurance disputes that you think will become particularly common during this transition? In your opinion, what will be some of the most important things for auto insurance companies in this time of transition?

Source: Los Angeles Times, “Self-driving cars could flip the auto insurance industry on its head,” James F. Peltz, June 20, 2016

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