How Will Driverless Cars Impact Insurance Rates?

Of the 10.8 million car accidents in 2009, 95 percent were caused by driver error. Accidents have declined slightly in the years since, but scientists are working on developing computer-operated cars that will literally drive themselves. In theory, these driverless cars would be safer, more economical, and more convenient than human-operated vehicles. They may also cause insurance rates to plummet, or even make insurance unnecessary.

Will Driverless Cars Really Reduce Accidents?

Car accidents happen when people either drive inappropriately or break the rules of driving. If all people drove the speed limit, yielded appropriately, and had perfect reaction times, auto accidents would be extremely rare. The vast majority of collisions occur when a driver either doesn't see a potential threat or is unable to react to it in time.
In this sense, driverless cars would limit the risk of auto accidents significantly. On the other hand, there's bound to be a rough transitional period between the release of the first legal computerized vehicles and a time when all cars are driven by machines. A mix of drivers and driver-free cars on the road may lead to complications, especially if the computers are not savvy enough to predict erratic driving behavior on roadways.
What Will Happen to Insurance?

Assuming that driverless cars will one day replace regular human-operated automobiles, traffic and insurance laws will need to change to keep up with the times. Right now, a car's driver is held liable for damages that the vehicle causes. If computerized vehicles become standardized, this liability may shift to the car's manufacturer or the software designer. In this changing world of technology, insurance companies may need to redefine their focus.

One thing that will certainly change is the way insurance rates are calculated. Right now, insurance prices are determined almost entirely by calculating a driver's risk. In a future where all cars are operated by computers, risk factors will decrease tremendously and become standardized between drivers. Insurance rates should plummet, since insurers won't need to pay as much for claims. There should also be no reason for some groups, like young people and the elderly, to pay more for insurance as they will no longer have higher risk.
Of course, drivers may not be free of all responsibility and new risk categories might be established for new perils. Computers can short out, get viruses, or miss important patch downloads. If a car's on-board computer were to fail due to poor maintenance, the driver might still be held liable for the damage. The driverless cars also have the ability for drivers to override the car's decisions; if an accident occurs, the driver may still be held liable for failing to prevent it. The way insurance companies calculate liability and rates will need to change to reflect the new technologies.
Technology is changing and developing faster than ever. In a few lifetimes, people have gone from traveling by horse and carriage to cars; now those cars are evolving in new and exciting ways. We're a long way from seeing our roads dominated by driverless cars and low insurance rates, but it is a possibility on the horizon.
Claire Zermeno is a freelance writer for www.carinsurance.org.uk, a website where you can compare insurance quotes to get the cheapest deal possible. Take advantage of their service and lower your car insurance rate.