The first death caused by a self-driving car not only showed the current limits of the new technology, and also highlighted the continued need for traditional liability insurance.
While some have questioned whether self-driving cars will need to carry the traditional package of coverages, the accident shows that while self-driving cars will likely make our roads much safer, they will probably never be accident free. There are just too many variables.
Tesla Motors has stated that the May 7 accident in Williston, Florida, occurred because the Tesla Model S’s autopilot sensors did not pick up a white tractor-trailer that drove across the highway perpendicular to the vehicle.
In a statement from Tesla the company stated that, “Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied.”
Killed in the accident was Joshua Brown, 40, of Canton, Ohio.
In addition to Tesla, a number of automobile manufacturers, including Mercedes, BMW, and Audi are moving ever closer to self-driving cars with a host of collision avoidance features that aim to respond quicker and more precisely than a human operator can.
However, Tesla’s statement stressed the limits of its current technology.
“It is important to note that Tesla disables Autopilot by default and requires explicit acknowledgement that the system is new technology and still in a public beta phase before it can be enabled. When drivers activate Autopilot, the acknowledgment box explains, among other things, that Autopilot ‘is an assist feature that requires you to keep your hands on the steering wheel at all times,’ and that ‘you need to maintain control and responsibility for your vehicle” while using it. Additionally, every time that Autopilot is engaged, the car reminds the driver to ‘Always keep your hands on the wheel. Be prepared to take over at any time.’ The system also makes frequent checks to ensure that the driver’s hands remain on the wheel and provides visual and audible alerts if hands-on is not detected. It then gradually slows down the car until hands-on is detected again.”
The End of the Driver as We Know It?
Bryan Reimer, a research scientist in the MIT AgeLab and the Associate Director of The New England University Transportation Center, doesn’t think the driver is headed for extinction just yet, or even in the near future.
“These technologies show a lot of promise, however, you are not going to get into a black box and say ‘take me somewhere’ at the consumer level,” Professor Reimer said in 2015. “New technologies will reduce fatalities and accidents, but it won’t eliminate them.”
There’s Still a Need for the Human Operator
“Higher levels of automation in the vehicle will still have humans in a supervisory role,” Reimer adds, noting that the sophisticated auto-pilot in planes still has human operators even with planes separated by thousands of feet of airspace. “The more automation, the more skill and training you need,” professor Reimer explains, pointing out the extensive training that pilots undergo. In the case of cars, “we have no equivalent educational structure in place.”
He also adds that with the close spacing of cars, which can be in fractions of a meter, and the variability of road conditions, it make roadways “a much more dynamic environment and harder to predict.” With the enormous number of cars on the road, often coming from different directions, it makes “the speed of decision-making much tougher.”
In addition, any self-driving technology will have to coexist with human drivers for a long time to come. “If everything was automated, it would be much easier,” Reimer adds, noting that we a tendency to both “over-trust and under-trust technology.”
A Wide Variety of Insurable Risks
Self-driving cars won’t mean the elimination of hazards. For example, there were 250,000 flood damaged cars from Superstorm Sandy in 2012, and in 2013 there were 699,594 cars reported stolen. Add to the mix everything from trees falling on cars, to vandalism, and there are not going to be many people that want to drive their new car without fire, theft and collision insurance.
There certainly will be changes in insurance needs, as changes in the ownership structures mean more car-sharing and ride-sharing scenarios.
The popularity of Uber and Lyft has already seen GEICO respond with ride-sharing insurance, and you can expect more policy innovations as insurers meet new consumer demands.
A Safer World that Still Needs Insurance
We live in a lot safer world than we did a hundred years ago. Commercial buildings have automated sprinkler systems and fire alarms, and homes have smoke detectors and burglar alarms, yet they both still have fires and break-ins, and they still need insurance.
It’s likely that in 2030 your car will still need insurance too.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.