Cookies help us improve your website experience.
By using our website, you agree to our use of cookies.
    • Protect the environment. Think before you print.

Driverless cars expected to hit roads in 2018, insurers beware

June 30, 2014

How would driverless cars change the insurance industry?

Google self driving car

About 93 percent of all accidents are attributed to human error. This statistic is likely leading the way for a new trend in the auto industry, and it could impact the auto insurance industry in a big way too, according to Zurich’s Jonathon Charak, FCAS, MAAA.

Meet Automated Vehicles (AV), also known as self-driving cars, set to hit the market sometime between 2018-2020. That’s right. No driver required.

Google will purportedly be the first to make models, but luxury car brands like BMW and Mercedes are in advanced stages of production and predict to have their first models ready by 2018-2020 as well, according to Marco Della Cava’s article in USA Today.

The benefits of such an automobile are expected to return 4.95 million fewer accidents, 30,000 fewer deaths, 4.8 billion fewer commuting hours, 1.9 billion gallons in fuel savings, and increase car utilization from 5-10 percent to 75 percent or more, as predicted by according to’s article on AV’s ripple effects.

Google engineers have also demonstrated the safety of its automated vehicles. Self-driving cars managed to navigate construction cones and brake to avoid a collision. Driverless cars can even wait until a stream of bicyclists passed before making a right turn, according to Della Cava’s article.

But what do these no-driver automobiles mean for the auto insurance industry? Who takes the blame when this technology fails? Should drivers expect spikes in liability insurance?

The answers to these questions are still to be determined. But, Charak expects liability coverage to be strict with any kind of AV failure.

Other industries likely to be affected, according to, are healthcare, which is expected to see a drop in emergency room visits; gasoline sales would tumble not only because of fewer cars, but also because they would operate more efficiently; local governments might need to install fewer traffic and street lights, and producers of cement and asphalt will likely see a reduction in business as road expansion will likely not be needed.

New insurance models are also expected to arise to cover this entirely different way of around.

How do you see auto insurance changing with AV?