How Driverless Cars Will Change Auto Insurance?

Car insurance is a proliferating market, with millions of policies sold every month, and hundreds of thousands of people changing, switching, or buying new policies every day. With time, the way people drive their car, and the car itself has changed a lot. However, the same cannot be said for auto insurance.

Car insurance policies, coverage, and pretty much everything else have remained the same ever since the inception of the concept of insurance policies. The prices have gone down a bit as car companies started making safer and more secure cars.

So what happens when we start seeing driverless cars around? The first thought we get is that everything would look futuristic. But what about the thing that we cannot see? How would driverless cars affect auto insurance policies? Let’s find out. 

When we say driverless, we open a big box of definitions, ideas, and concepts. There are so many cars that can be considered “driverless”. While most cars today are semi-autonomous, no car is completely “driverless”.

Car companies still require the driver to actively monitor the road and keep the car in their control. This means that even if you drive these “driverless” cars in auto-pilot mode, you are still responsible for any road accident. So liability insurance, collision insurance, and other policies are applicable without any change. 

But what if in the near future, there are completely driverless cars? What if there is no steering wheel in the car? What about car insurance policies? Would you still need to buy auto insurance policies when you won’t be driving the car? This is a question that needs some speculation, and some extrapolation. 

Traditional auto insurance policies are bought by individual drivers. Some policies like comprehensive insurance, collision insurance, etc are optional policies that drivers can choose to have. But some policies like liability insurance are made mandatory by the government. 

So with traditional auto insurance policies, the car company has nothing to do with the insurance. They sell the car, you are required to get the proper insurance policies, and the insurance companies manage the risk and costs of the accident. 

With driverless cars, the entire dynamic of risk management and government mandate will shift. Since the car company is claiming that the car can be driven autonomously (by the car itself), the entire liability of the accident comes to the car manufacturer. 

But the government would still require people to have insurance policies. So no, auto insurance companies won’t go out of business. The only change, in this case, would be the price, and the buyer of the insurance policies. 

So if the government wants people to have auto insurance (mainly liability insurance), who is going to buy it? The driver would not be so keen on spending hundreds of dollars when they know they won’t be driving the car. 

Mandatory car insurance policies like liability insurance and others (personal injury protection plan and uninsured motorist coverage in some states) will be included with the car. The car companies will buy the policies by partnering up with auto insurance companies. 

So when you buy the car, you might see the insurance costs included in the price. Or perhaps the car companies won’t show the extra cost of insurance but still charge you more for the car. This depends on the car company. 

But when it comes to car insurance policies for driverless cars, owners will not have to buy some car insurance policies. The mandatory policies will come bundled in with the car. But what about other policies? 

Collision insurance and comprehensive policies are two optional policies that cover the cost of car repairs for road accidents and damages due to natural calamities and theft, respectively. Since it is not mandatory, likely, car manufacturers won’t include these policies with the car.

So owners will have to buy these policies directly from car insurance companies. But is that going to be a hard sell? Since your car is driven automatically, and assuming it happens in the future, the car is somewhat “accident-proof”. Would you buy collision insurance? 

Many people will avoid buying collision insurance as driverless cars will reduce the rate of road accidents. This will lead to a severe price drop for collision insurance. Collision insurance will be exactly like comprehensive insurance when it comes to risk factors. 

Think about comprehensive insurance; it is not every Monday that your car gets damaged in an earthquake, or gets charred in a fire. Even though these natural disasters are very rare, people still buy comprehensive insurance just to be sure to be safe. 

The same thing is going to happen with collision insurance. While accidents will be rare, buying a relatively cheap insurance policy to stay secure against the financial damage of car accidents would be a preferred option.

Perhaps in the distant future, we’ll get rid of car accidents completely. Maybe then there won’t be a mandatory insurance policy requirement, or the need for buying collision insurance, comprehensive policy (better theft protection as well), etc.

Maybe then we wouldn’t need auto insurance policies. But that day is far away. You need to stay insured when it comes to cars and make sure that you are insured properly.

This includes getting all the mandatory car insurance policies like liability insurance, personal injury protection, etc. Make sure that your insurance policies have sufficient coverage limits (and not just the minimum coverage limit specified by the state). 

Also, make sure that you get the most affordable car insurance plans in your state. For example, if you live in Nevada, search for cheap car insurance in Nevada, compare the plans and get the one that suits your needs the best.

With all these practices, you’ll be completely secure against the financial damages of a road accident while saving money at the same time. So drive safe, and stay insured.

With the automobile industry changing so fast, here’s how driverless cars will change auto insurance in the future, and how it will affect drivers.