The Advent of Autonomy Drives Novel Considerations for Insurance in a Driverless World

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Widespread access to advanced self-driving vehicles is still a future scenario, but that future – which will have a significant impact on the insurance industry – is fast approaching. Advances in AV technology are already beginning to disrupt considerations for vehicle manufacturing and insurance,1 as evidenced by the industry authorities’ new vocabulary for these emerging trends. New questions about liability have also emerged because technology error may also need to be considered alongside driver error. In addition, both state and federal legislation are beginning to address new technology, with a variety of state legislative activities, and federal legislation underway. The uniformity of legislation, or the lack of it, is sure to affect the growth of audiovisual technology and the insurance sector. Furthermore, data regulation and privacy affect insurance coverage. Car insurance may see interesting changes.

What is autonomy: the new designation may reflect a new insurance paradigm

The new audiovisual discourse proves this new paradigm. The Society of Automotive Engineers describes six levels of automation in terms of driver involvement. These range from level 0, fully human command, to level 5, no human intervention. Intermediate levels vary in AV performance leadership, and under these conditions, human supervision required

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Consider the current state of the vehicle technology insurers in which you operate. Most vehicles are considered Level 0. Some publicly available vehicles offer Level 1 automation that deals with either (1) steering or (2) braking and acceleration assistance, but not both simultaneously. 4 Specific Vehicles Companies offer vehicles with Level 2 “partial driving automation” capabilities that manage steering, acceleration, and braking under certain conditions, but require the driver to remain alert, often with hands on the wheel. To date, no vehicles sold to consumers in the United States have automation levels 3 through 5, under which an individual no longer requires active supervision of driving. (which offers driverless delivery services and has appeared in advertisements for Domino’s Pizza) already owns driverless vehicles, but those vehicles operate commercially in limited conditions and locations.

The automotive industry has brought us to the cusp of a paradigm shift

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As assisted vehicles progress to Level 3 and beyond, liability and insurance coverage issues may become increasingly complex. Even in Level 3 AV, where an autonomous system handles all driving in certain situations, the driver must still be ready to take over driving on demand. 8 However, as human oversight diminishes, producer responsibility may become increasingly prominent, as is already the case when vehicles break down.9 With a change in driving, insurance may follow.

Tesla, whose cars offer semi-AV features, is experimenting with specialized insurance programs. In October 2017, Tesla, in partnership with Liberty Mutual, launched an auto insurance product called InsureMyTesla, designed specifically for Tesla vehicles. The insurance program, which is open to owners of Tesla cars, is currently only available in California, although Tesla has expressed plans to expand later in 2021.

Waymo, for its part, announced in December 2017 a partnership with Trv for passenger insurance. Trv will reportedly provide travelers insurance to Waymo for lost or damaged property and medical expenses related to the trip.

State legislation has begun to create new insurance frameworks

With the development of autonomous vehicles, it appears that federal and state laws and regulations are about to have an impact on the insurance industry. The Hawaii Legislature recently found that twenty-nine states and metropolitan cities have enacted legislation, and eleven state governors have issued executive orders, regarding utility vehicles.16 and it is important to monitor them.

While auto insurance regulation is currently primarily a function of state law, the National Highway Traffic Safety Administration (NHTSA) has issued guidance for states regarding regulation of motor vehicle liability and insurance. NHTSA considerations include: (a) the distribution of liability among spacecraft owners, operators, passengers, manufacturers, and other entities in the event of an accident; (b) Determining which parties should carry the motor insurance; and (c) enforcement of laws that provide for tort.17 Furthermore, NHTSA suggests that entities that apply to test vehicles on public roads are required to demonstrate their ability to meet provisions for damages, and cite minimum requirements recommended by the American Association of Vehicle Managers. Which is represented in 5 million dollars insurance 18

In terms of liability, with high-end self-driving vehicles not yet available to consumers, many current state vehicle laws regulate which manufacturers and commercial service providers are allowed to test utility vehicles on public roads. To maintain a $5 million insurance policy

It appears that states like California, which allow utility vehicles to operate for testing and non-testing purposes, are requiring manufacturers of autonomous vehicles to hold a $5 million insurance policy in either context. Requirements in commercial contexts, such as $1,500,000 per incident while the AV operates as part of a transportation network company (TNC), also known as a rideshare 23 company However, other states, such as Arizona, simply state that the entity testing or operating the AV meets the requirements applicable insurance 24

Entities that must hold insurance similarly vary by state and context. Some countries seem to offer flexibility in certain situations. For example, in Nevada, an entity that tests highway assistive vehicles must provide proof of insurance, but for a controlled audio-visual vehicle provider that operates a vehicle for a TNC, TNC insurance can be provided through one or A set of policies by any one or group .25 In Florida, AV used as part of a TNC must be covered by a specific insurance policy maintained by either the AV owner, the TNC, or a combination of the two. Florida allows the operation of low-speed AV vehicles incapable of human occupancy. It seems that states like Texas simply state that AV maintains liability coverage

Federal law could fundamentally change auto insurance: government safeguards, cybersecurity and privacy

While the federal spacecraft law has been slower to develop, a bill called the Future Life Assurance, Publication and Research in Safely Evolution Vehicles Development Act, or Autonomous Driving Act, was reintroduced in the US House of Representatives in June 2021, after Senate opposition in 2017, and not gain momentum when reintroduced in 2020.29 Among other things, the law prohibits states from maintaining regulations for the design, construction or performance of utility vehicles unless they meet the standards set forth in the law, and requires the Secretary of Transportation to establish a “highly automated mechanism Vehicle Advisory Council’ within NHTSA.30

Some provisions of the Autonomous Driving Act will interest insurance industry stakeholders—even if the draft law says relatively little about antiviral vehicle insurance, other than emphasizing that its safeguard provisions should not prohibit state insurance regulation.31 For example, Article 5 prohibits Manufacturing or importing “any highly automated vehicle, a vehicle that partially automates a driving, or an automated driving system unless such manufacturer has developed a cybersecurity plan.” Corrective actions against these weaknesses, including measures to protect key controls and systems. The requirements of this cybersecurity plan are noteworthy because many commentators have emphasized that networked auxiliary vehicles can enable malicious cyberattacks.33 For this reason, many experts believe that the demand for cybersecurity insurance will increase with auxiliary vehicles in the market, and some have suggested that policies Car insurance may include cybersecurity riders 34

The Autonomous Driving Act also requires audio-visual vehicle manufacturers to develop privacy plans based on specific criteria. Commentators have noted that ARV data may be of interest to auto insurance companies for their own use and for monetization. (35) Accordingly, insurance industry actors have expressed concerns about the possibility of disparate data standards in the state, and have stated that federal standards may be useful. (36)


  • The development of auxiliary vehicles may bring changes to the auto insurance industry.
  • New car insurance models were accompanied by new developments in the field of audio-visual vehicles.
  • The growing number of states enacting AV laws may play an important role in the future of auto insurance.
  • Auto industry stakeholders will want to keep an eye on whether the self-driving law gains more traction this time around.


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