[The picture is from Relawding，the copyright belongs to the original author]

Autopilot technology is moving very fast. Now, cars are not just simple ways to get around. In Nova Scotia, Canada, this tech is already being used. ^[1]Many new cars have these advanced driver-assistance systems (ADAS), like adaptive cruise control and lane-keeping assist. Fully self-driving cars might take a few more years to be everywhere. But these smart features are already changing how we drive. They are also starting to change the car insurance business.

These days, more people in the US are buying or trying self-driving and semi-self-driving cars. Tech companies like Waymo, Cruise, and car makers like Tesla are always growing their autopilot tests. This helps the tech get better.

Think about insurance models. In the past, car insurance was mostly about the driver's fault, like if the driver caused a crash. But with self-driving cars, it gets much more complex.^[2] For example, if the autopilot system fails, the blame may not be only on the car owner. The car maker or software company could also be at fault. So, insurance products and related laws must include these new factors.

According to Intact Insurance's grouping of autopilot tech, there are five levels.

Level 0 is a car with no automation. The driver must do everything. Level 1 is driver assistance. Here, the car can control some things, like cruise control or automatic braking. Level 2 is partial automation. The car can steer and control speed, but the driver must still pay attention. Level 3 is conditional automation. The car can do most driving tasks, but the driver might need to help sometimes. Level 4 is high-level automation. The car can drive itself most of the time and only needs a person in special cases. Level 5 is full automation. The car can do all driving jobs without any human help. Right now, most cars on the road are between Level 1 and Level 3. As the tech gets better, the driver's job is slowly changing. It is moving from steering the wheel to trusting the car's computer system.

[The picture is from The Insurance People，the copyright belongs to the original author]

So, what kind of effect does autopilot tech have on car insurance?

1. Decline in car insurance business volume

As self-driving cars become more popular, the number of traffic accidents should go down a lot. This is because autopilot tech can cut out many human mistakes, like drunk driving and tired driving. Because of this, the need for common car insurance will fall. Claims will happen less, and the money from premiums will get smaller. Also, with the growth of shared travel (like robot taxis), many young people might not want to own a car.

2. Change in insurance policyholders

Right now, most car insurance buyers are individual car owners. But self-driving cars could change that. Since accident blame is more on the car maker, autopilot software company, or car rental firm, these companies might become the new insurance buyers. So, insurance companies must change their sales methods and who they serve to keep up with this shift.

3. Change in risk assessment

Before, car insurance risk assessment looked mostly at the driver's actions and the car's past data. But in the autopilot age, insurance companies must think about more things. They must consider the vehicle's tech features, how reliable the system is, how safe the algorithm is, and even the safety of the hardware (like chips). The tech differences between various makers will also change the risk. So, insurance companies need to create new assessment models to handle this complex situation.

4. Adjustment of insurance rates

In the short term, autopilot tech leads to fewer accidents. So, the cost of insurance claims will drop a lot, and the insurance company's profits might rise. But later on, as the market grows and competition gets stronger, insurance rates could go down. This is especially true when the traffic accident rate keeps falling. Then, insurance companies need to use different prices to match what the market wants. They will set special prices for self-driving cars with different tech levels.

5. More complex claims process

Handling accidents with self-driving cars will be harder. The car is run by AI. So, finding who is at fault is not just about the driver. It might involve many parties. These include the car maker, the software company, and the operator. Because of this, insurance companies will need more tech checks and data tools for the claims process. This will make everything more involved.

[The picture is from Pronto insurance，the copyright belongs to the original author]

6. Opportunity to improve claims efficiency

But self-driving cars have a good point. They can collect a lot of live data. Insurance companies can use this data. They can find the crash cause and who is liable more accurately. This allows them to give faster and more personal claims service. So, the claims process will be quicker. Customers will be happier. There will be fewer arguments. The company's service and competitive edge will improve.

7. Emergence of new insurance types

As autopilot tech gets better, some common car insurance types might not be needed. For example, car theft insurance might end. This is because self-driving cars have strong safety systems. At the same time, insurance companies will make new types of insurance. These could be cyber-security insurance for self-driving cars or fault-liability insurance. These new insurance types give insurance companies new chances for business.

8. Transformation of insurance services

In the future, insurance companies will change. They will move from "claims-based" services to "prevention-based" services. This means they will not just pay out after a crash. They will use tech like big data and AI to help car owners control risks and stop accidents. Also, insurance companies will work with tech companies and car makers. They will offer more useful services, like risk assessment and safety tips. This will help customers lower their risks better.

Examples of changes in the self-driving car insurance field:

California has strong rules for self-driving car testing. Testing companies must buy at least $5 million in insurance and share accident data as required. Arizona supports self-driving car testing. There, insurance companies need to gather detailed accident data to decide who is at fault. Texas has many highways, so it is a good place to test self-driving trucks. There, insurance rules require business fleets to have higher liability limits and confirm crash details with remote tech. Florida was one of the first states to allow self-driving cars on the road. It focuses on test projects, and the minimum insurance need for fully self-driving cars is $1 million. Also, the no-fault liability system might change because of problems with the autopilot system.

If you are planning to buy a new car with advanced driver-assistance systems, you should talk to your insurance agent first. This will help you see if these systems will change your premiums. Before you choose, you can ask some questions to make a wiser choice: Can cars with autopilot help get cheaper insurance? If the sensors, cameras, or automation systems in the car get broken, how much will the fix cost? If a crash occurs and these help functions are involved, how will they decide who is to blame? Knowing this can help you see the insurance cost differences between various car models. Then you can avoid paying too much for tech you do not need.

Source:

[1] NEWS: “Nova Scotia forms partnership with Google Cloud to improve digital health care”

[2] Youtube: “How Self-Driving Cars will Destroy Cities (and what to do about it)”

Reference:

[1] Bauldinsurance :“The Road Ahead: How Self-Driving Features Impact Car Insurance”

[2] Amcinsurance: “How Are Driverless Cars Going to Impact the Insurance Industry?

[3] Inszoneinsurance: “Impact of Autonomous Vehicles on Auto Insurance in 2025”