April 17, 2023 from RATESDOTCA
Self-driving cars have been making headlines in recent years, promising a future of safer and more efficient transportation. But beyond the obvious benefits for drivers, what impact will autonomous vehicles have on the auto insurance industry in Canada?
Driver Liability vs. Product Liability
According to a report by the Insurance Bureau of Canada (IBC), human error is found to be the sole cause in 57% of all accidents in Australia, and it contributes to over 90% of accidents. The introduction of autonomous vehicles has the potential to significantly reduce the number of crashes if humans were no longer in control.
Under Canada’s current at-fault auto insurance system, fault is determined when a person is involved in a motor vehicle collision. However, with self-driving cars, it becomes less clear who is responsible when things go wrong. Liability in AV collisions may shift from driver liability to product liability, potentially leading to complex product liability litigation that could take years to resolve.
Self-Driving Cars are Still in the Early Stages
Globally, autonomy is showing up first in commercial vehicles such as robo-taxis, automated trucks, and delivery vehicles. The Victoria Transport Policy Institution predicts that it will be the 2050s before AVs make up for half of new vehicle sales. Until then, insurance providers face challenges in accurately assessing risks due to the limited data available on collisions involving autonomous vehicles.
To address the complexities of insuring autonomous vehicles, the IBC recommends establishing a single insurance policy that covers both driver negligence and the automated technology. This approach would ensure immediate compensation for injured parties, regardless of whether the human operator or autonomous technology was in control. The IBC also suggests establishing a legislated data-sharing arrangement between vehicle manufacturers, vehicle owners, and insurance providers to determine the cause of collisions and updating federal vehicle safety standards with technology and cybersecurity standards.
While the future of insuring autonomous vehicles remains uncertain, insurance providers and regulators are actively working to adapt to this changing landscape. As the adoption of self-driving cars increases, the insurance industry will need to develop innovative solutions to address liability, coverage, and risk assessment.
The introduction of self-driving cars has the potential to revolutionize the auto insurance industry in Canada. With a significant reduction in human error, insurance premiums may decrease, but the shift in liability from human drivers to technology and product manufacturers poses new challenges. As the industry navigates these changes, collaboration between insurance providers, regulators, and technology developers will be essential to ensure a smooth transition into the era of autonomous vehicles.
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