Insuring Autonomous Vehicles

Property Casualty 360

The U.K. is ahead of the U.S. in preparing for driverless cars

Since the creation of the first personal auto policy more than 100 years ago, auto insurance policies have all had similar goals: to protect the vehicle owner and driver in the event of an accident, theft or other damage to the vehicle.

With the invention and innovation of self-driving cars, the entire transportation system must adjust to humans as passengers only, and not drivers. The question arises: What sort of insurance will be required to cover incidents involving self-driving vehicles?

As self-driving vehicle testing ensues, the need to insure these vehicles increases. Insurance for a self-driving car must provide coverage for a host of issues that have only recently arisen. In June 2016, Adrian Flux, a popular U.K. insurer, introduced the first autonomous car insurance policy. While the Flux policy outlines several autonomous-specific scenarios that should probably be addressed in most self-driving auto policies, it also provides coverage consumers are currently used to seeing.

Insuring the car of the future

The Flux policy provides coverage for damage or loss that occurs because of hacking or attempted hacking of the vehicle’s software, particularly the operating system. Hackers could potentially fool the car’s software into “thinking” there is an obstacle in the road when there isn’t. A hacker could commandeer the vehicle’s software and refuse to release the vehicle, an act of cyber-extortion called ransomware. Because of risks like these, coverage for hacking may become necessary.

The Flux policy provides coverage for a collision caused by a failure to install updates to the car’s operating system, firewall or navigation system within 24 hours of being notified about the update by the manufacturer. This approach allows for a small window of user-error, but if an owner fails to install updates after the 24-hour time limit, the assumption is coverage will not be provided.

Satellite failures or outages

The policy provides coverage for damage caused by satellite failures or outages affecting the navigation system of the vehicle. Global Positioning Satellite Systems (GPSS) provide vehicles with accurate timing and positioning data. Satellites will potentially give autonomous vehicles much of the information needed to navigate roads, allow for intelligent speed adaptation, adopt to changing traffic congestion, and facilitate road traffic warning systems.

There is some risk of high-rise buildings in cities blocking the satellite signal from seamlessly reaching the car. New developments in Wi-Fi, 3G and 4G, and the ability to use more than one of those three platforms at one time may provide a more seamless satellite signal.

The Flux policy also provides coverage for loss or damage caused by the failure to use the manual override function to avoid an accident in the event of a software or mechanical failure, and coverage for the failure of manufacturer software or any other authorized software for the car. The policy also provides the coverage that consumers are used to receiving with their personal auto policies, including comprehensive, third-party, fire and theft coverage.

Read more of the original article at Property Casualty 360.

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