Autonomous driving is turning the traditional upside down. This applies not only to automobile manufacturers and suppliers. In the future, insurers will also have to reevaluate motor vehicle damage in an entirely new way and may have to adjust their terms.
Up to now, the situation has been clear: anyone damaging another vehicle, a fence, or a person while driving a car is liable. For this reason, motor vehicle liability insurance is mandatory. This insurance serves to insure the risk of operation originating from the vehicle, such as due to burst tires or hoses, while the driver and owner of the vehicle are also insured. Keyword: human error. Product liability insurance is rarely triggered.
This will change in 2018 when German companies such as Bosch will start testing self-driving taxis on German roads, including in Düsseldorf, but also on trial routes in Berlin, the Bavarian town of Bad Birnbach, and on Sylt, thus catching up with U.S. pioneers Uber and Tesla.
Automated driving, however, will shift the claims situation in the event of car accidents. Frequently, accidents will no longer be due to human error, but to the car itself respectively the system installed in it. If the vehicle is unable to maintain a risk-minimized condition in all situations, this is, in the first instance, a case for product liability insurance.
From 2018 onwards, autonomous driving will pose new challenges to the German insurance industry. Damage from accidents will more likely result in cyber insurance or product liability insurance claims in the future
Cyber insurance will play a major role when it comes to autonomous cars. Automated vehicles offer an attractive target for hackers and may thus have a high potential for damage. In view of this development, insurers need to review and, where necessary, adjust their terms of insurance. It must be considered that the ever-increasing networking of vehicles with their surroundings will play an essential role, particularly also with regard to the introduction of the new 5G wireless standard.
Autonomous driving will also have an impact on the product liability insurance policies of automotive manufacturers and suppliers. The number of cases where it is necessary to check whether product liability insurance covers damage caused by defects in autonomous vehicles is likely to increase. It will probably take another five to ten years for cars to drive independently almost everywhere on German roads. Especially in this pioneering era of automated driving systems, however, insurers should be concerned with the new circumstances to be able to offer automotive manufacturers and suppliers the appropriate insurance for autonomous driving at an early stage. Automotive manufacturers and suppliers are particularly affected by increased product observation requirements, especially in the early stages of the use of automated driving systems in road traffic.
Your contacts for questions about insurance associated with autonomous driving are the colleagues from the Insurance/Reinsurance Practice Group. The team around Dr. Herbert Palmberger and René Schnichels, LL.M. has expertise in European and international insurance law.