How Will Car Insurance Work For Self-Driving Cars?

Self-driving cars can seem like something from the future, but the future is closer than you think. In fact, many manufacturers  have already rolled out some self-driving features. While an official rollout of fully autonomous cars hasn’t happened yet, self-driving cars could hit the market in the next few years. Imagining cars without a human driver is tough to reconcile and brings a lot of questions and concerns. Will self-driving cars be safe? Will they be affordable? How will car insurance be affected by self-driving cars? Based on new research from Metromile and The Ferenstein Wire, this new technology stands to revolutionize the auto landscape and could save consumers $1,000 in car insurance every year. Read on to learn more about car insurance and self-driving cars. 

car insurance self driving cars

The self-driving cars landscape 

Fully self-driving cars, also sometimes referred to as autonomous cars, aren’t sold to the public yet. But as noted above, automated driving systems are already in some vehicles, helping take some of the load off the driver, and are currently being tested. 

Currently, many top car manufacturers are working to make autonomous vehicles (AV) a reality and testing out the technology to move things forward. 

Where we’re at with self-driving cars 

Self-driving technology is moving forward rapidly, but full-on driverless vehicles aren’t a thing just yet. For some context, the National Highway Traffic Safety Administration (NHTSA) has outlined the various automation levels from the Society of Automotive Engineers (SAE). Currently, we’re at level 2. These levels of automation are:

  • 0 = No automation, where the driver is fully responsible
  • 1 = Driver assistance, where some features assist the driver
  • 2 = Partial automation, which includes automated functions such as steering and acceleration, but the driver is still responsible and needs to remain present and engaged
  • 3 = Conditional automation, where a driver is needed but isn’t tasked with monitoring the environment and must be ready to take over when needed
  • 4 = High automation, where the vehicle can perform all driving requirements under certain conditions, and the driver may be able to take over as needed
  • 5 = Full automation, where the vehicle can perform all driving requirements during all conditions, and the driver may be able to take over as needed 

So while more vehicle manufacturers are adding self-driving features to their cars, we’re still a few years out from a fully autonomous vehicle. The NHTSA predicts that by 2025 and beyond, fully automated safety features will be available and on the market. 

Currently, General Motors is looking to manufacture one million self-driving vehicles by 2030

Self-driving cars and insurance issues

One of the primary questions with self-driving cars is if there will still be a need for car insurance. Car insurance providers assess a driver’s risk on the road, among other factors, and offer various types of coverage in the event of property damage, bodily injury , and more. 

In many cases, incidents occur because of the driver. So what happens if you no longer need the driver or the risk is seriously reduced? Will it be the driver’s fault or the auto manufacturer’s fault? 

In response to questions like this, the NHTSA states:

“It is vital to emphasize that drivers will continue to share driving responsibilities for the foreseeable future and must remain engaged and attentive to the driving task and the road ahead with the consumer available technologies today. However, questions about liability and insurance are among many important questions, in addition to technical considerations that policymakers are working to address before automated driving systems reach their maturity and are available to the public.”

Car insurance claims for property damage

So even though self-driving cars can reduce the risk of an accident and make establishing fault a bit murky, there will still be a need for car insurance. 

According to the Insurance Information Institute, car insurance claims around accidents may be reduced, but there will still be a need for coverage when it comes to property damage or loss due to theft or inclement weather. 

The cost of repairing self-driving vehicles may be higher 

Additionally, it’s important to note that the overall cost of repairing self-driving vehicles may be higher. 

Given the technology of autonomous cars, including various sensors, cameras, and other equipment — when repairs are needed, the cost will likely be at a premium and not something your local mechanic can fix. 

Insurance underwriting and claims 

As technology shifts, so will the car insurance industry. Underwriting criteria and liability insurance will likely be reimagined. 

Claims for accidents may be reduced and the Insurance Information Institute notes that healthcare, disability, and workers comp claims from auto accidents may be reduced as well. Since many car accidents are caused by human miscalculation, error, or judgment, self-driving cars may end up lowering car insurance rates. 

What the future holds for autonomous cars and insurance 

There’s no doubt that autonomous cars will be a reality faster than we think. What that looks like from an insurance perspective is complex. Each state has its regulations as it relates to auto insurance. On top of that, each state deals with liability for injuries differently and has different minimum requirements for coverage. 

One of the persisting questions is who will pay in the event of an incident ? Though the NHTSA states that the liability will be shared, how that works and actually breaks down will need to be clarified. Will the insurance company subrogate the AV manufacturer if the technology failed and the operator was not at fault? These nuanced situations and important questions will need to be answered. 

Given all of these factors, self-driving cars can create insurance issues that will need to be dealt with. On top of that, it’ll be an adjustment for consumers as well. 

According to a 2021 JD Power Study on self-driving cars, 41% of respondents are comfortable with Advanced Driver Assistance Systems (ADAS) as the highest level of automation, and only 14% of respondents are comfortable with fully self-driving cars. 

In the coming years, car insurance may look different, and consumers may see autonomous cars on the market. 

The bottom line 

Car insurance for self-driving cars might look different than what you’re used to today. At Metromile, we will have the ability to adapt our signature pay-per-mile insurance to autonomous vehicles as they enter the market. For now, low-mileage drivers can use pay-per-mile technology to pay less for car insurance. You pay for gas by the gallon, so why not pay for insurance based on the miles you drive? Get a free quote with Metromile.

Melanie Lockert is a freelance writer, podcast host of the Mental Health and Wealth show, and author of Dear Debt. She’s a cat mom to two jazzy cats, Miles and Thelonious, an amateur boxer, music lover, and needs coffee to function.