Self-driving cars are coming.
With some of the world’s largest companies like Google and major auto manufacturers getting on board, at this point it’s almost a sure thing. Self-driving vehicles are going to revolutionize the auto industry, including insurance.
Here are a few ways experts predict the auto insurance industry will change.
Today’s auto insurance industry
The auto insurance industry is huge. According to industry experts, it employs roughly 277,000 people and generates $220 billion in revenue annually. Every state in the United States requires auto insurance, which obviously means it’s a big business.
Self-driving vehicle insurance today
Today the companies making self-driving cars, like Google, Tesla, Mercedes, and Volvo, are insuring their own vehicles. Since they are the ones writing the software that drives the vehicles, and potentially cause accidents, they are the ones taking on the insurance risk.
While it is possible that insurers will end up entering into agreements with these manufacturers to cover this risk, for now, they are self-insuring. This means the cost of insurance will be built into your vehicle purchase, at least for now.
What do the experts say?
According to a widely cited essay written by Yale Law School student Jack Boeglin in an issue of the Yale Journal of Law and Technology, “If [self-driving] vehicles became mandatory there would be no need for private insurance, since all liability would be transferred to manufacturers… ”
Some experts think this is a longshot, but Boeglin makes a good point. If the vehicle manufacturers can perfect their software so that the number of accidents dramatically drops, there will be no need for auto insurance in the traditional sense, aside from policies that cover things like vandalism or weather damage.
Warren Buffet, owner of Geico, predicts that insurance premiums will plummet, but doesn’t see it happening any time soon. He thinks that less than 10% of the vehicles on the road ten years from now will be self-driving.
What about “traditional” vehicles?
Even if you don’t plan on buying a self-driving vehicle, experts say you will most likely benefit from self-driving vehicles. Self-driving vehicles should make roads safer, which mean insurance companies will lower their premiums all around, even if you prefer a traditional vehicle.
Whatever type of car you have, if you need help with your insurance or simply have questions, it’s a good idea to speak with the experts at John B. Wright Insurance.
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