The tragic Uber accident in Arizona involving a pedestrian highlights a potential shift in liability associated with driverless vehicles, according to a March Wall Street Journal article titled “Uber Car Fatality Awakens Insurers.”
The accident occurred at 10:00 p.m. at night, while the Uber test car was in a self-driving mode but with a safety driver within the vehicle. The car was travelling at 40 mph when the pedestrian allegedly stepped in front of the vehicle. Uber accident liability has apparently been resolved now that the company has reached a settlement for an undisclosed amount with the victim’s family.
Driverless vehicle technology created by Uber, Tesla, and Google has the auto insurance industry trying to figure out how to design policies that will accurately price corresponding risks. Uber’s test vehicles are reportedly insured through a commercial insurance policy of up to $5 million per accident.
It is estimated that car insurers bring in about $230 billion in annual premiums under auto insurance policies. That number has the potential to decrease significantly according to some car insurance consultants if advances in driverless technology can eliminate many accidents caused by human error.
Under traditional car insurance policies, individual vehicle owners must purchase liability insurance to help cover damage caused by their vehicle. Under a system where driverless vehicles are prevalent, however, the makers of the vehicle and their many complex parts may have to bear a larger burden of liability via product liability insurance. Among those who could potentially bear the burden of fault for accidents are: vehicle owners, manufacturers, suppliers, service providers, and data providers.
One company that is beginning to insure driverless vehicles is Munich Reinsurance America Inc., by insuring some “entities that are researching, testing, or developing hardware or software designed to move autonomous vehicle technology forward.”
As driverless vehicles become more prevalent, the shifting of liability continues to remain undetermined. Most of the uncertainties are due to the scarcity of data on how driverless vehicles will perform when sharing roads with manually operated vehicles.
Uber and other companies seeking permission to test driverless vehicles must comply with all financial responsibility laws that require vehicle owners to carry insurance. In Arizona the minimum coverage amount per person is $15,000 and per accident is $30,000, for example. Mandated minimum coverage levels are often below what most people actually carry, however. If a commercial vehicle, in use by a corporate entity, is involved in an accident, accident victims would still have the opportunity to sue for greater damages.
Uber is one of the companies that has made insurance a high priority in its driverless vehicle campaign.
On a related note, the insurance industry continues to adapt to the needs arising from the growth in ride-sharing services. Ride-sharing endorsements, which add extra coverage to personal plans, are now available in most states. Furthermore, hybrid policies are also more readily available and help blend personal and commercial insurance.
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