- Level 0: The car issues warnings and could momentarily intervene but control of the car is not sustained.
- Level 1: the automated system and the driver share control of the car. For instance, the car can control the speed while you control the steering. You, however, have to be ready to take control of the car at any time.
- Level 2: The car’s system can take control of the car but you still have to monitor and be prepared to take over driving if the automated system fails to respond as expected. In fact, during SAE 2 driving, you will be required to have your hands on the steering wheel to confirm that you are ready to intervene in case of anything.
- Level 3: You can safely take your attention away from the car to do other thing such as watching a movie or even texting. The car will handle everything such as braking. However, you might still be required to intervene under certain circumstances like traffic jams.
- Level 4: This car has the same function as level three except that you won’t be required to operate the car for safety. You can even go to sleep. Self-driving might be required if you are in traffic jams or under any other special circumstances. Other than that it can safely park or stop the trip if you do not take control of the car.
- Level 5: This kind of car does not require any kind of intervention from you.
How Will Self-Driving Cars Affect the Insurance Industry?
Self-driving cars have already made major changes to the automotive industry and the insurance industry will have to adapt to accommodate these changes. Here’s what will need to be done:
Car manufacturers will have to assume liability
Who should be held liable when you get into an accident with a car that does not have a human driver? At this point, it would only make sense to assume that the manufacturer should be held responsible for damages.
Mercedes Benz, Volvo and Google have already assume the cost of insurance in cases where the car’s self-driving system failed and caused an accident. Companies like Tesla are going a step further by offering insurance programs to customers who buy their cars. This gesture further proves that the company is confident in the technology they currently offer.
If you think all this sounds a little too good to be true, you’re right. Getting compensated by car manufacturers won’t be a smooth process. There will be litigation and you will have to prove that it was the car’s system that failed and it wasn’t human error that led to the accident.
Insurance premiums might reduce
Car manufacturers are constantly improving the technology used to manufacture self-driving cars with the aim of making them safer. Not only will this reduce the number of accidents but it will also make them more efficient.
Currently more than 37,000 car accidents happen in the United States every year. We predict there will be a downward trend in accidents which will bring down the cost of insurance premiums. Insurers are already offering premium discounts for drivers who own cars that have Advanced Driver Assistance Systems and they are likely to offer more discounts based on similar or better features that come with the self-driving cars.
Drivers might drop or reduce coverage
By 2040 self-driving cars could be the norm and drivers will opt out of carrying personal accident insurance. They might only be forced to carry the minimum legal coverage. States might even do away with mandatory coverage as the roads become safer.
Will the Insurance Industry Die Out?
As self-driving cars become more popular, insurance companies will be forced to re-evaluate their premiums. They will have to collect data to help them fine tune their premiums and to offer better services to their customers.
Since these changes will start making an impact in the next 10-15 years, insurers have enough time to do their research and to change their business models to accommodate future changes.