For a long time, car insurance has been one of the most lucrative and vital parts of the insurance industry as a whole. With cars occupying such an essential part of our lives and being so necessary for our lifestyle while at the same time being so dangerous (about 1.3 million die and between 20 to 50 million suffer non-fatal injuries in car accidents every year), it is only natural that people pay special attention to ensuring themselves from dangers associated with them. And it would be an understatement to say that smart cars will lead and are already leading to a serious disruption in the industry – in fact, they will transform it completely. In this article, we will cover the most significant changes they are going to bring about.
1. The transition of Liability to Manufacturers
Who is to blame for a crash if it happens with a fully automated vehicle? Can the driver be liable for a crash that happens without his/her direct input? However outlandish the idea may seem for now, the liability lies with automakers, and they will have to accept it – after all, if their automated system caused a crash, the problem lies with it, not with the driver or the conditions on the road. Google, Mercedes-Benz and Volvo already accept this condition (as long as it is the self-driving system, not the driver, that caused the crash), and other manufacturers will have to follow suit. It means that every car insurance firm and a Houston car accident lawyer will have to acquire technical skills to deal with the new kind of cases where they will have to analyze potential flaws in self-driving systems. They can be expanded and flexibly adapted, you can save costs and react quickly to changed market and general conditions.
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2. The decrease in Insurance Premiums
It is already becoming quite obvious that self-driving cars are significantly safer than the ones operated by drivers. The very fact that automakers are already accepting liability in case their self-driving systems cause crashes is telling – they express confidence in their efficiency. It means that as smart cars become more and more widespread, it will lead to a decrease in the number of accidents – first gradually, then faster. This, naturally, will mean lower risks and, consequently, lower insurance premiums.
3. Clients Lowering or Dropping Coverage
As the roads are getting safer, car owners will eventually realize that they do not need extensive auto insurance coverage, and lawmakers can follow suit. If the risk of an accident is low and you are not legally obliged to have an insurance policy, you will think twice before investing into one. This will undoubtedly mean that insurance companies will have to reevaluate their business approach and restructure it altogether because people will not be ready to pay as much as they do today.
4. The interplay between Greater Safety and Higher Repair Costs
Smart cars are generally smaller, more fuel-efficient and safer than their counterparts, so one would think that insuring one should be cheaper as well. It, however, is not always the case. They are also usually more expensive and use many high-tech parts that are difficult and costly to replace or repair. For example, replacing a bumper of a normal car is simple (although it can be expensive in the case of luxury models). Still, a smart car’s bumper has to have, at the very least, a distance sensor, which immediately ramps its price up by a significant margin. Insurers will have to take both factors into account when calculating the conditions of their policies.
5. Automated Data Collection
Smart cars are a part of the Internet of Things, and will be connected to the Net at all times. This means that the information about their owner’s driving habits, locations visited, history of interactions with other cars and behavior on the road and inside a vehicle will all come into play when determining the conditions of his/her policy. After this data is collected, other AI-powered algorithms can take it up to make the necessary calculations and deliver a verdict without having to involve a single human employee.
As you can see, the advent of smart cars means both challenges and opportunities for the insurance industry – the earlier one will start to adapt to them, the more likely one is to live through this age of disruption.