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I hear people fretting about liability as a "problem to overcome," but it's actually much simpler than the technical challenges. People have to drive the same

I hear people fretting about liability as a "problem to overcome," but it's actually much simpler than the technical challenges. People have to drive the same distance regardless. Whether it's human or computer error leading to the accident is irrelevant to your premium. To a car insurance company it's all about rates and risks. Assuming driverless cars are shown to be safer than humans - and they'll have to be in order to get approval - your car insurance company would be stupid not to cover them. From their perspective it's simple economics. The accident rate is lower, thus the potential liability is lower. If your insurer isn't willing to insure your driverless car, you'll switch to someone who does. If no established provider insures driverless, that's a no-brainer company to start. Similar payments in a high-margin industry with lower average payouts? Yes, please. Liability is the easy part.

dclowd9901 12y ago
The problem is your insurance company. If you get in an accident, they're not going to want to pay for it, and they're going to go after Google for the damages. Now we're right back where we started.
- pyoung 12y ago
  Why couldn't Google just offer their own insurance plan? They could bundle the cost with a monthly or yearly service/maintenance fee. If the margins are so high on insurance products, I'm sure they would be more than happy to keep the profits themselves.
  - neolefty 12y ago
    It depends on how they decide to hedge their own risk. Buy from an insurance agency = safe but more expensive. Self-insure = cheaper but riskier. But what would they insure against? Individual accidents or class actions?
- brc 12y ago
  No. Current driver-based insurance policies might be based on the ability to hold the driver personally responsible if they are negligent. Insuring a vehicle is just figuring out what the likely payout ratio across a cohort of those vehicles is going to be, then working backwards from there to come up with a premium that will cover the claim amounts, administrative costs and provide a pool of funds to invest. Lots of things are insured today with no interest in who is operating them. Automated cars are no different to that. Essentially you're imaging a current situation (where a driver is insured) and transferring that to a situation with no driver. That's wrong. Insurance companies don't care - they just want to be able to predict what the likely payout rate is. And that's how much it will cost. If that includes cover for buggy code, it just means a higher premium. Essentially younger drivers have buggier driving code, and that's why they cost more to insure.
  - stormbrew 12y ago
    Also, in terms of regulatory capture, it's almost certain that the legal requirement to hold insurance for your car will continue. But the combination of the fact that payouts will probably move towards class action against software bugs (where class action suits usually have a lower per-person payout, and will be paid out by massive policies held by the car companies) and the fact that in general fewer of those people will ever need a payout thanks to safety improvements (especially as we move into most cars on city roads being driverless) will mean insurance companies will have to pay out less. I will never understand why people think insurance companies will be a barrier to adoption. Insurance companies are going to love this. I think the tipping point will be when insurance rates on driving your own car skyrocket.
    - brc 12y ago
      >I will never understand why people think insurance companies will be a barrier to adoption. Insurance companies are going to love this. I think the tipping point will be when insurance rates on driving your own car skyrocket. Yes. The logic goes like this. 'Currently I'm an insured driver'. I will have a car with no driver. It therefore cannot be insured. Where I live cars are already insured for third-party personal damages, regardless of who is driving them. It's a fixed-cost premium attached and paid at vehicle registration time. Thus, if you are injured in a motor vehicle accident, regardless of who is at fault, you (or your heirs) will be paid compensation in a regulated environment. This is a functioning market which doesn't adjust for driver age or experience, but instead collectively insures all vehicles on the road, and pays out when a claim is made. Periodically, when more than one insurer is involved, they will negotiate an 'at fault' percentage in order to work out which ratio at which the claims are attributed to each insurer. This may involve discussion of the drivers actions (to determine fault), but the payout is always made - because the vehicle itself is the thing that is insured. In this system, the only way the driver can become liable for the claim is if they specifically and deliberately engaged in a criminal act, such as driving an unregistered vehicle, or driving under influence. Mere speeding or red-light running doesn't void the insurance (as these are traffic infringements rather than criminal acts). And in these cases, the insurance company still pays out the compensation, but may proceed to recover the compensation from the driver that broke the law. This type of system would easily be translated to driverless vehicles. The owner of the vehicle would pay a registration fee, and a portion of that fee would be passed onto the owners choice of insurer (or a valid certificate of insurance would need to be presented for registration, which is the same thing). As long as the insurance was paid, then third-party personal and property damage would be paid out to any accident claimants. If the insurance company then decided someone was directly liable for causing the claim (such as tampering with vehicle systems or negligent coding) then they could recover the claim money. Such a system would be a vast improvement on the current situation, whereby it's the driver that is insured, and because of the various risk factors, insurance premiums are all over the place. As a result, the riskiest drivers also tend to be the ones lacking insurance, which is the worst case for someone who needs to make a claim. But then insurance is one of the most misunderstood products around, so I guess it's not surprising that ignorance of how it works abounds.

dclowd9901 12y ago

The problem is your insurance company. If you get in an accident, they're not going to want to pay for it, and they're going to go after Google for the damages. Now we're right back where we started.

pyoung 12y ago
Why couldn't Google just offer their own insurance plan? They could bundle the cost with a monthly or yearly service/maintenance fee. If the margins are so high on insurance products, I'm sure they would be more than happy to keep the profits themselves.
- neolefty 12y ago
  It depends on how they decide to hedge their own risk. Buy from an insurance agency = safe but more expensive. Self-insure = cheaper but riskier. But what would they insure against? Individual accidents or class actions?
brc 12y ago
No. Current driver-based insurance policies might be based on the ability to hold the driver personally responsible if they are negligent. Insuring a vehicle is just figuring out what the likely payout ratio across a cohort of those vehicles is going to be, then working backwards from there to come up with a premium that will cover the claim amounts, administrative costs and provide a pool of funds to invest. Lots of things are insured today with no interest in who is operating them. Automated cars are no different to that. Essentially you're imaging a current situation (where a driver is insured) and transferring that to a situation with no driver. That's wrong. Insurance companies don't care - they just want to be able to predict what the likely payout rate is. And that's how much it will cost. If that includes cover for buggy code, it just means a higher premium. Essentially younger drivers have buggier driving code, and that's why they cost more to insure.
- stormbrew 12y ago
  Also, in terms of regulatory capture, it's almost certain that the legal requirement to hold insurance for your car will continue. But the combination of the fact that payouts will probably move towards class action against software bugs (where class action suits usually have a lower per-person payout, and will be paid out by massive policies held by the car companies) and the fact that in general fewer of those people will ever need a payout thanks to safety improvements (especially as we move into most cars on city roads being driverless) will mean insurance companies will have to pay out less. I will never understand why people think insurance companies will be a barrier to adoption. Insurance companies are going to love this. I think the tipping point will be when insurance rates on driving your own car skyrocket.
  - brc 12y ago
    >I will never understand why people think insurance companies will be a barrier to adoption. Insurance companies are going to love this. I think the tipping point will be when insurance rates on driving your own car skyrocket. Yes. The logic goes like this. 'Currently I'm an insured driver'. I will have a car with no driver. It therefore cannot be insured. Where I live cars are already insured for third-party personal damages, regardless of who is driving them. It's a fixed-cost premium attached and paid at vehicle registration time. Thus, if you are injured in a motor vehicle accident, regardless of who is at fault, you (or your heirs) will be paid compensation in a regulated environment. This is a functioning market which doesn't adjust for driver age or experience, but instead collectively insures all vehicles on the road, and pays out when a claim is made. Periodically, when more than one insurer is involved, they will negotiate an 'at fault' percentage in order to work out which ratio at which the claims are attributed to each insurer. This may involve discussion of the drivers actions (to determine fault), but the payout is always made - because the vehicle itself is the thing that is insured. In this system, the only way the driver can become liable for the claim is if they specifically and deliberately engaged in a criminal act, such as driving an unregistered vehicle, or driving under influence. Mere speeding or red-light running doesn't void the insurance (as these are traffic infringements rather than criminal acts). And in these cases, the insurance company still pays out the compensation, but may proceed to recover the compensation from the driver that broke the law. This type of system would easily be translated to driverless vehicles. The owner of the vehicle would pay a registration fee, and a portion of that fee would be passed onto the owners choice of insurer (or a valid certificate of insurance would need to be presented for registration, which is the same thing). As long as the insurance was paid, then third-party personal and property damage would be paid out to any accident claimants. If the insurance company then decided someone was directly liable for causing the claim (such as tampering with vehicle systems or negligent coding) then they could recover the claim money. Such a system would be a vast improvement on the current situation, whereby it's the driver that is insured, and because of the various risk factors, insurance premiums are all over the place. As a result, the riskiest drivers also tend to be the ones lacking insurance, which is the worst case for someone who needs to make a claim. But then insurance is one of the most misunderstood products around, so I guess it's not surprising that ignorance of how it works abounds.