Know Everything About Autonomous Vehicle Insurance

Posted on: Nov 7, 2022 | | Written by:

Know Everything About Autonomous Vehicle Insurance

Published on November 04, 2022. EST READ TIME: 3 minutes

The present generation is witness to some of the main technological advancements in the world. Technology has grown leaps and bounds and has changed the way the world works and thinks today. Self-driving cars are the latest technology that has come into the automobile sector. These are a reality, but a question that comes up is how insurance will work for these cars. Most auto insurance policies are designed keeping in mind that a driver drives them. But as this is not the case with these cars, the effect of car insurance has to be understood and may be worked upon by the insurers.

Let us discuss how self-drive car insurance works will and what we should know about it.

What are Self-Driving Cars?

Before we talk about car insurance for self-driving cars, let us get the basics correct and understand what exactly these cars are. These cars are programmed to work without a driver. All that is needed to be done is that a location needs to be entered, and then nothing else needs to be done except enjoy the drive. The cars have sensors that allow them to adapt to various scenarios. Some big companies have started manufacturing these cars, and very soon, these might become normal.

These cars have levels ranging from 0 to 5.

● Cars at level 0 are entirely manual, and there is no level of automation

● Level 1 cars are the ones that have some automatic features like cruise control, navigation, etc. These require the driver and his skills to operate.

● Cars in level 2 have some functions which are automated, like speed control and park assist. These functions are automatic, but the alertness of a driver is needed.

● Level 3 cars are automated partially, i.e. they can be self-driving cars in some conditions, and at this time, the alertness of the driver is not needed.

● Level 4 cars can be driven completely automated in city traffic and on highways too. The driver can take control at any point, and also, in dangerous situations, the car stops or gives control to the driver.

● Fully automated cars come in level 5, and there are no seats for a driver and just passenger seats. The location for pick up and drop off needs to be entered, and the car navigates and moves on its own. There is no requirement for a driving license for any person owning cars at this level.

Car Insurance for Self-Driving Cars

Do self-driving cars require insurance as there is no or less human error? At the moment, automated cars of level 5 are not available in India, and thus, the answer is based on assumptions. The completely self-driven cars will not need regular insurance but driverless car insurance.

There are chances of accidents in cars that are partially automated, and also technological errors can happen in any car. Due to this reason, autonomous vehicle insurance is what these cars will need.

The premium for Self-Driving Cars:

How can insurance be discussed without talking about premiums? To date, no formal announcements have been made by insurance companies as fully automated cars are still not available in India. The fact that must be kept in mind here is that when a car insurance policy is given to an individual, the driving history of the driver is taken into account to ascertain the premium. But as these self-driving cars have no driver, the features like the safety ones and the technology of the vehicle might be the main points considered to calculate the premium.

Some factors that might be considered to calculate the premium for autonomous vehicle insurance:

● Type of insurance policy

● Model, make, and variant of the car

● Add-ons chosen

● Insured declared value

● Geographical area

Besides the above, some important points will need to be kept in mind while calculating premiums. The insured declared value for these cars will be high, and thus, that cannot be the only deciding factor for premium calculation.

1. Level of Automation:

This is because there are different levels of automation, which implies that the level of human intervention will also vary.

2. Number of Claims:

As the possibility of human error is low with automation, hence the frequency of accidents is expected to reduce. Thus, the claims would also eventually go down and that would lead to a reduction in the premium.

3. Human Errors:

With technology driving these cars, human errors should be less, reducing the risk and, thus, the premium.

4. Liability of Driver:

Human errors like drinking and driving or violating traffic rules will be less, and this will increase safety. These will reduce accidents as the only error here will be a technological failure.

5. Repair Costs:

The technology of such level will be expensive, and this would also mean that in case of a failure, the repair cost will be high. This will have an impact on the premium.

Need for Insurance for Self-Driving Cars:

Autonomous or self-driving cars have a high level of safety because of the technology used. But this cannot be the reason why no insurance could be needed for these cars. Undoubtedly, these cars will come in a different segment, but let us talk about some reasons which show why insurance is needed.

1. Technical Faults:

Bad human driving or wrong human judgment for sure might not be there in these cars as there is no role of a driver. But this indicates that there can be other faults which are all technology based. Machines can break down, and this makes insurance necessary for these cars.

2. Different Automation Levels:

Cars, when it comes to automation levels, have different levels. Except for level 5, which is completely automated, the others do require human intervention and, thus, are susceptible to human errors. Thus, insurance becomes compulsory for these cars.

3. Legal Compliance:

As per the Motor Vehicles Act, 1988, any vehicle plying on the Indian roads needs to have mandatory third-party car insurance . This is a requirement to cover losses occurring to a third party. As this is legal compliance, a similar mandate can come for autonomous cars. These do not guarantee complete safety, and thus, policymakers can make car insurance for these cars a legal requirement.

4. Cover for Damage:

Damage, loss, and theft are nothing to do with human intervention, and these risks continue to exist for self-driving cars. Natural calamities or even manmade calamities can affect all cars, and thus, comprehensive car insurance is needed for these cars also.

Conclusion

Autonomous vehicles will be new and may be the best technological upgrade in the automotive sector. The cars will change the way the world drives, but the question here will be its impact on car insurance. Third-party insurance or comprehensive insurance will all change for these cars, but the need for insurance cannot be completely negated. Let us see how insurance will change and what factors will affect the change.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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