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If a driverless car gets into an accident, whose fault is it?
Published: Oct 26, 2016 10:16 a.m. ET
Auto insurers are taking a wait-and-see approach with self-driving cars
Tesla
In the (not-too-distant) future, new Teslas will come with self-driving capabilities.
By
Alessandra
Malito
Reporter
Now that self-driving cars look likely to hit the mass market in the next few years, who will be responsible for the car in the event of an accident?
Elon Musk, chief executive officer of Tesla TSLA, +1.73% , announced on Wednesday that all of its new vehicles will come with built-in self-driving hardware. He also said that the car company wouldn’t be liable if there were an accident with a car in self-driving mode.
“That would be up to the individual’s insurance,” a Tesla spokeswoman confirmed Musk said on Wednesday when asked about it. “If it’s something endemic to our design, certainly we would take responsibility for that. But you know, I think one should view autonomous cars much like an elevator in a building. Does Otis take responsibility for all of the elevators around the world? No they don’t.”
The statement differs from Volvo VLVLY, -2.39% which said last year that it would take full liability for any of its cars while they’re in autonomous mode.
It’s not just Volvo and Tesla grappling with this issue. Auto insurers and car companies aren’t entirely certain just yet who will be left holding the check — and they may not be until these cars have been in the market for a while. “The U.S. auto insurance industry has decades of claims experience with driven cars and yet a very small sample when it comes to claims generated by self-driving cars,” said Michael Barry, vice president of media relations at the Insurance Information Institute, a consumer education group. “I don’t think auto insurers will know the risk until they see the types of claims that will come in.”
And the dilemma is becoming increasingly urgent. The first autonomous vehicles could be in showrooms as early as 2018 and 2019, according to a report by auditing firm KPMG. Right now, automotive and technology companies, including Ford F, +2.85% Audi AG, -9.07% NSANY, -2.49% and Google GOOG, -1.12% have been building and testing their self-driving cars. Semiautonomous cars, those that beep when things appear in blind spots and automatically apply brakes when the car in front gets too close, are already on the roads, such as those from Tesla, Infiniti and Subaru.
Some cases may end up getting complicated, where car companies, insurance firms and drivers try to determine who or what was at fault at the time of the crash. “All but the most fully automated vehicles will be controlled, at least some of the time, by human drivers,” a 2014 Brookings research report stated.
Insurance firms must prepare for what could be a turbulent transition period, since driverless cars will be “detrimental” to the auto insurance industry, Tom Wilson, chairman and chief executive of The Allstate Corporation ALL, +0.27% said during a Sanford-Bernstein conference last year. The company expects revenues to be up marginally for the next 10 years and then begin to drop, he said.
Some good news: Car insurance premiums may decline as much as 40% by 2050, when self-driving cars are expected to be in full swing, insurance firm Aon said, Bloomberg reported last month. That, however, depends on there being a drop in accident rates for driverless cars compared to traditional vehicles.
There were more than 5.3 million car crashes — 2.2 million of which injured people and killed another 32,367 — in 2011, according to the National Highway Traffic Safety Administration. Another NHTSA report found most accidents were the result of human error.
Tesla’s first fatal accident involving a semiautonomous car in May sparked concerns over driverless car safety. The Tesla car didn’t use its automatic braking system because it didn’t detect a tractor-trailer that came from two lanes away turning in front of it. Tesla claimed it was not the fault of its Autopilot system. There were other fatal Tesla crashes this year, as well — one in the Netherlands, where Tesla said its Autopilot feature was not on, and another in China, which is under investigation.
The driver of a Tesla Motors car in Beijing accused the manufacturer of overselling the car's Autopilot function after he crashed into a parked vehicle last week. The Tesla Model S reportedly rammed an illegally parked car on a Beijing motorway while in autopilot mode on August 6. Video uploaded to Weibo shows the incident.
Such accidents might not have happened if it was fully autonomous, partly because drivers would relinquish control to the vehicle entirely. “The Tesla involved in the crash in Florida was not a self-driving car, it was a vehicle with semi-autonomous features that is intended to operate in very limited circumstances,” said Russ Rader, spokesman for the Insurance Institute for Highway Safety, a nonprofit group funded by auto insurers.
Driver-assisting technology currently on the market is helping drivers stay safe, Rader said. Automatic braking and forward collision warning are reducing front and rear-end crashes.
Still, self-driving cars won’t be the norm even after they are first introduced. Cars on the roads now are 11 years old on average, and turnover takes time, the Insurance Information Institute’s Barry said. In the meantime, drivers should focus on driver-assisted technology, not fully self-driving technology, Rader suggested.
“They should put self-driving cars out of their minds,” he said. “What they should be thinking about is crash avoidance features available now that are making people safer.”
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