Adapting To The Future: Insuring Autonomous Vehicles
What does the future of driving mean for the future of insurance? As automotive technology continues to evolve, the needs of drivers, automotive makers, and insurance companies will also shift. With researchers predicting the autonomous vehicle market will be worth 400 billion U.S. dollars globally by 2025, and in advanced economies, highways will be nearly driver-free by 2050 1, it’s important to begin digging into the implications of this transformation for your own insurance needs and the future of driving as a whole.
Let’s start with the basics. What exactly is an autonomous car? It’s a vehicle that “uses a combination of sensors, cameras, radar, and artificial intelligence to travel between destinations without a human operator. 2” There are actually six levels of automation, starting with 0 (no automation) and going up to 5 (a fully autonomous vehicle). To qualify as fully autonomous, the vehicle must be able to navigate without any human intervention on roads that have not been adapted for its use. That “fully autonomous” bit is still on the horizon, but, OEM investment in Advanced Driver Assistance Systems (ADAS) for new model vehicles is expected to approach $183 billion by 2028 3.
If you have a newer vehicle, you probably drive a car with level 1 or 2 automation, which includes advanced driver assistance systems (ADAS) that aid steering, braking, accelerating, staying in-lane, backing up, and more. With such advanced features, you might also have noticed a reduced insurance rate. That’s because research has shown that ADAS-equipped vehicles show a 27% reduction in bodily injury claims and a 19% reduction in property damage frequency 4. Smarter cars mean safer drivers, which translates into discounts on your insurance premiums. But even as we become accustomed to high-tech cars, almost half of all drivers are not interested in owning a driverless car. And though you may not be currently looking to own a fully autonomous car, these vehicles are projected to become a regular part of our everyday lives in the near future. 55% of small business owners think that their fleets will be fully autonomous in the next twenty years, and the autonomous vehicle industry increases by 16% globally every year 5. That means major changes to industries like public transport, delivery services, and more—changes that could impact the needs of individual consumers when it comes to personal vehicles.
According to some industry predictions, fully autonomous vehicles may remove driver error from the equation, potentially moving the liability for any accidents from drivers to automotive companies. Individual drivers, on the other hand, are going to need new types of insurance products as cars become more and more automated. Cybersecurity will become vitally important to protect against vehicle theft, unauthorized entry, and the use of ransomware to hold vehicles hostage. It’s worthwhile to also mention the implications of cars becoming connected devices, creating opportunities for identity theft, privacy invasion, and misuse of personal information.
So even as automakers and manufacturing companies take on more potential liabilities like software failures, hardware issues, and expensive parts, consumers (that means you!) will still need to stay informed and up to date on their personal insurance needs. Choosing an insurance company committed to cutting-edge technology will become increasingly important. Agencies like Toyota Insurance Management Solutions work with carriers that leverage connected car driver data to stay ahead of the technological curve, empowering drivers with resources and information they need to find the right policy at the right price. Shop online or ask a Toyota Insurance agent for help finding a policy that fits your needs.
1 With researchers predicting the autonomous vehicle market will be worth 400 billion U.S. dollars globally by 2025, and in advanced economies, highways will be nearly driver-free by 2050 – Statistica.com
2 What exactly is an autonomous car? It’s a vehicle that “uses a combination of sensors, cameras, radar, and artificial intelligence to travel between destinations without a human operator. – TechTarget.com
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