Coverage Issues Relating to Self-Driving Cars


Tony Roehl of Morris Manning & Martin and Chuck Smith of Allstate presented on the technology and risks behind autonomous vehicles. 


The future is here as noted by automakers:

  • Tesla has said that a driverless Tesla will able to drive from L.A. to New York City “by the end of 2017.” 
  • GM has said autonomous vehicles could be deployed as early as 2020
  • Volvo has announced plans to start selling cars with autonomous driving technology by 2020
  • Audi has claimed that its popular A8 model will be capable of self-driving in the 2018 model year


Key to understanding these claims is an understanding of what is meant by the term “autonomous vehicles.” 


Roehl noted the levels of vehicle automation:

 Level 2: Limited automation

• Advanced Driver Assist Systems (ADAS) like automatic braking, warning systems, parking assistance, etc.

Level 3: Limited self-driving automation

• Driver can take control in certain situations or when the car indicates to do so

Level 4: Full self-driving automation

• Car will perform all driving functions and monitor road conditions from the beginning to end of a trip. Cars are networked to one another and the environment

Level 5: Performance Equivalent to Humans

• Fully-autonomous system that expects the vehicle's performance to equal that of a human driver in every single driving scenario


According to Roehl, as of this year, 41 states and Washington, D.C. have introduced and considered legislation related to autonomous vehicles and 14 state legislatures and Washington, D.C. have enacted legislation related to autonomous vehicles.  Additionally, Governors from Arizona and Massachusetts issued executive orders pertaining to autonomous vehicles.  This is allowing testing of autonomous vehicles in many states, now with significant sums being spent to advance the technology.  In 2013, Google invested $258 million in Uber and GM invested $500 million in Lyft, announcing it will launch its first driverless car on the Lyft platform.  Further, GM and Lyft are planning to begin testing a fleet of self-driving taxis on public roads within next few months, and the two plan on deploying “thousands” of test vehicles beginning in 2018.


Chuck Smith focused on the future of auto insurance in a world of autonomous vehicles and noted that vehicle ownership will change as will the needed insurance change.   Individual ownership of a car will become the exception.  94% of crashes are currently due to human error.  As one of the features of autonomous vehicles is accident avoidance capability, a shift from a negligence standard of liability to a products liability standard will occur, impacting the insurance model and insurance premiums.  Accidents will still happen but will occur from things like design defects, weather, road conditions, poor maintenance and hacking rather than from driver negligence.  As a result, manufacturers will try to limit their exposure by such approaches as retaining ownership and maintenance of the vehicles they produce. 


Throughout this change, the insurance industry will remain a key source of unique skills.  Indeed, the insurance industry has more detailed accident data & models than the product manufacturers, greater risk management expertise and the best understanding of liability systems and will be a key contributor to change.