Insurance for the Car of the Future

The NMA Foundation presents the Car of the Future weekly feature:

A question that has been asked a great deal lately is who will be the responsible party when a driverless car crashes?  If the owner is not driving and indeed did not make any mistakes, should he or she be responsible for what their car does? The rush to autonomy has many questions that might just leave the auto insurance industry scratching its head for answers.

According to Swiss Re, global auto insurance is a $700 billion dollar market that represents 42 percent of global aggregate property and casualty insurance.  Extremely competitive, auto insurance companies could actually find themselves squeezed out of the market. Business Insider notes that insurers like Travelers and Mercury General have noted in SEC filings that driverless cars could threaten their business models.

For example, Tesla, Inc. announced this past week the company has begun bundling auto insurance, a maintenance contract and the car price all into one payment for their Asian and Australian customers. In January, the National Highway Traffic Safety Administration (NHTSA) confirmed that Tesla’s first-gen Autopilot feature has reduced Tesla vehicles’ crash rate by 40 percent. Driving a Tesla has less risk and the insurance should reflect that idea.

When driverless cars hit the level 4 and 5 stage of autonomy—automakers will be more liable than ever before as the burden is no longer on the driver to properly control the vehicle. Level two and three of autonomy becomes a bit more complicated when discussing liability and pricing insurance. The current Tesla Autopilot system has level 2 autonomy. The question of who is responsible for a crash becomes a bit more complicated because motorists are driving the vehicle with automated features.

The United Kingdom has already been working on the issue of auto insurance in the car of the future. British government officials say that a single insurance product will be available to cover a driver when a vehicle is being used conventionally, as well as when a car is being used in autopilot mode.

Auto insurance companies will also have to fight automakers over car data ownership.  Connected vehicle software, proprietary to the automaker, will now be embedded inside the vehicle. The data included is exactly what insurance companies have historically used to price and mitigate risk effectively. Data sets include speed, distance between vehicles, weather conditions, brake pressure, and driver distractions.

Will insurance companies begin making alliances with automakers so the companies are pooling their resources and protecting themselves?

How would this affect the consumer?

This reliance on software could potentially be a new opportunity for insurers to develop multi-tiered insurance products. Examples include hybrid products combining commercial liability with specific cybersecurity protection and personal auto insurance.

The auto insurance industry will be disrupted by not only the new technology but also the business model of risk that might well be headed into the dust bin of history.


The NMA Foundation is a 501c3 nonprofit organization dedicated to protecting your interests as a motorist and citizen through the multi-faceted approach of research, education, and litigation.  The Foundation is able to offer this assistance through tax-deductible contributions.

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If you are interested in learning more about the Car of the Future check out the following NMA resources:

NMA Driving News Feed—Over 50 Car of the Future stories are placed each month in the NMA Driving News—the go-to source for all your driving news information from around the country.

NMA’s Flipboard Magazine called Car of the Future—Over 50 stories are placed each month in this magazine devoted to the Car of the Future.  Stories featured include future car politics, industry news and thought pieces.

Pinterest Boards

Follow the National Motorists Association on Pinterest Here OR

Follow individual Boards that have a specialized focus on the Car of the Future:

Car of the Future

Car sharing/Ride sharing Watch

Concept Cars

Connected Cars, Connected Cities

Driverless Cars

Electric Cars (EVs)

Flying Cars

Future of the Motorcycle

Hybrid Cars

Hydrogen Cars

Solar-Powered Cars

If you have an interesting story about the Car of the Future, please feel free to send us a link to the NMA Email address [email protected]. We thank you for your support!

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