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How are automated cars a threat to car insurance?

robmcm 11y ago
Reduction in accidents and auto makers taking responsibility for accidents. http://fortune.com/2015/10/07/volvo-liability-self-driving-cars/ http://fortune.com/2015/10/07/volvo-liability-self-driving-c...
riprowan 11y ago
Why should one need to buy a liability insurance policy on a self-driving car? What driver exactly am I insuring?
- dragonwriter 11y ago
  > Why should one need to buy a liability insurance policy on a self-driving car? The same reason property owners in general by liability insurance for liabilities that may occur to do property they own. > What driver exactly am I insuring? Most likely, you're insuring against liability resulting from your obligation as the owner (or leaseholder-in-possession, in the case of a lease) of the autonomous vehicle to maintain the vehicle in condition for safe operation and to remove it from operation if that is not possible.
- rdancer 11y ago
  The liability in car insurance is virtually unlimited. Cars are very good at killing people and damaging property. You don't have to insure against small payouts (large excess gives you small premiums), and this is an area where the insurance companies want to upsell you. The risk you're insuring is negligent or wilful bad driving, and risks inherent in the technology. All of the above is true for self-driving cars, only with much-reduced negligent risk. The premiums will go down significantly, but the consumer motivation and the public policy interest to have insurance will remain. It may be assumed by the manufacturers for 100% self-driven cars, but insurance of outsized payouts is not something unique to the current iteration of the car industry.
verbify 11y ago
Less accidents leads to lower premiums.
- maerF0x0 11y ago
  wouldnt fewer payouts mean more profits?
  - jonknee 11y ago
    It would mean much lower premiums or even no premiums as car manufacturers may take the liability.
munificent 11y ago
Caveat: I know very little about economics and find this stuff confusing. Here's how I assume it would work. For an insurance company to be profitable, premium payments need to be larger than claims payouts. If we assume self-driving cars will be a lot safer, then claims payouts will drop significantly. If we assume insurance companies compete with each other, then that opens up their margins and eventually that will contract again as they all lower premiums to compete. The end result is a smaller total amount of cash flowing through those businesses. The whole industry will contract because there's just less need for it to exist. You can think of insurance companies like a farm that harvests risk. With less risky automobiles, there's simply less crop for them to reap.

Reduction in accidents and auto makers taking responsibility for accidents. http://fortune.com/2015/10/07/volvo-liability-self-driving-cars/ http://fortune.com/2015/10/07/volvo-liability-self-driving-c...

riprowan 11y ago

Why should one need to buy a liability insurance policy on a self-driving car? What driver exactly am I insuring?

dragonwriter 11y ago
> Why should one need to buy a liability insurance policy on a self-driving car? The same reason property owners in general by liability insurance for liabilities that may occur to do property they own. > What driver exactly am I insuring? Most likely, you're insuring against liability resulting from your obligation as the owner (or leaseholder-in-possession, in the case of a lease) of the autonomous vehicle to maintain the vehicle in condition for safe operation and to remove it from operation if that is not possible.
rdancer 11y ago
The liability in car insurance is virtually unlimited. Cars are very good at killing people and damaging property. You don't have to insure against small payouts (large excess gives you small premiums), and this is an area where the insurance companies want to upsell you. The risk you're insuring is negligent or wilful bad driving, and risks inherent in the technology. All of the above is true for self-driving cars, only with much-reduced negligent risk. The premiums will go down significantly, but the consumer motivation and the public policy interest to have insurance will remain. It may be assumed by the manufacturers for 100% self-driven cars, but insurance of outsized payouts is not something unique to the current iteration of the car industry.

verbify 11y ago

Less accidents leads to lower premiums.

maerF0x0 11y ago
wouldnt fewer payouts mean more profits?
- jonknee 11y ago
  It would mean much lower premiums or even no premiums as car manufacturers may take the liability.

munificent 11y ago

Caveat: I know very little about economics and find this stuff confusing. Here's how I assume it would work. For an insurance company to be profitable, premium payments need to be larger than claims payouts. If we assume self-driving cars will be a lot safer, then claims payouts will drop significantly. If we assume insurance companies compete with each other, then that opens up their margins and eventually that will contract again as they all lower premiums to compete. The end result is a smaller total amount of cash flowing through those businesses. The whole industry will contract because there's just less need for it to exist. You can think of insurance companies like a farm that harvests risk. With less risky automobiles, there's simply less crop for them to reap.