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Baby, you can't drive my car - it drives itself! So who's liable?

A bill quietly made it through the Florida Legislature this session that poses some tricky questions for the insurance industry. Surprisingly, it is not related to property insurance or personal injury protection coverage, the two "hot button" insurance issues in the state. Rather, the new law deals with autonomous, or driverless, motor vehicles, and our question is this: If the car drives itself, is an auto insurance company obligated to defend the policyholder from a third-party lawsuit?

Google has already approached a number of car insurance underwriters for input on the company's driverless technology. Initial feedback was positive, according to Google higher-ups. For one, insurers are confident that Google will not release the technology to the public until it is proved to be safe. And, of course, the technology will not hit the consumer market for a couple of years, so insurers have some time to figure out the liability issues.

The cars rely on different types of technology to drive themselves. Computers, of course, have controlled auto systems for a while now. With the help of sensors, video cameras, lasers and a compendium of information gathered from manually driven vehicles, the driverless vehicle analyzes the driving environment more quickly -- and with more care -- than a human would. Lawmakers say that human error causes most car accidents; without the human, the risk is lower.

One of the challenges faced by insurers comes with the "manual override" feature. The human driver can shut the automatic driver off and take manual control of the car. Given the human error factor, insurers must decide what kind of rate structure and coverage options to apply. Policyholders could end up with two different tiers of coverage, one for when the car drives itself and the other for when the insured drives the car.

We will continue this in our next post.

Sources:

Florida House of Representatives, Final Bill Analysis: Bill #CS/HB 1207, accessed May 14, 2012

Business Insurance, "Google queries insurers on coverage for driverless cars," April 27, 2012

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