Report: Self-Driving Car Insurance Liability Could Shift to Automakers

Sept. 9, 2015—Hacker attacks and faulty software in self-driving cars could shift legal and regulatory liability away from consumers and toward the makers of the vehicles, according to a report by Reuters.

With sensors and software giving the vehicles quicker reflexes, autonomous cars have the potential to reduce the instances of traffic accidents. However, a greater level of automation increases the risk of hacking and faulty security.

"Although accident rates will theoretically fall, new risks will come with autonomous vehicles.

What should be done in the case of a faulty software algorithm? Should manufacturers be required to monitor vehicles post-sale in the case of a malfunction or a hacker attack?" asked Domenico Savarese, group head of Proposition Development and Telematics at Zurich, according to Reuters.

Although many established models for assigning liability will stay in place, certain responsibilities may shift toward manufacturers. Consumer behavior may also change as greater automation becomes available. Insurance costs could be affected if drivers become less prepared and practiced in their ability to avoid an accident.

Connected cars and software create new opportunities for insurance companies to customize policies.

"You could pay for how much you drive, or get a lower premium based on how well you drive," Savarese said, adding that these policies will only be made possible if the client allows the insurer to monitor them, according the the report.

If customers want to lower their premiums in exchange for monitoring, they can choose to install a type of black box device in their car or through their smartphone.