Technology has been rapidly advancing for the past 10 years leaving people to wonder what is next… As the days pass it is becoming more apparent that the automobile is a key focus of technological advancement. As the car becomes more sophisticated what will happen to car insurance?
The automobile is evolving whether you like it or not…
Sure there will still be those who want to own and drive their own vehicles, but soon self-driving cars will be hitting the streets for both personal and commercial purposes. During the shift to autonomous vehicles consumer preference will also change. What does that mean for car insurance?
No one really knows yet, but here are some predictions as to what will happen in the industry.
Prediction 1: Personally Owned, Driver-driven Vehicles
One prediction is that regardless of new technologies people will still want to own and drive their own vehicles.
There are many reasons people will want to stick to the current way of transportation. Privacy, flexibility, security and convenience are only a few. You also can’t forget the joy of driving. Being in control of a machine is a powerful experience.
In this case, car insurance won’t change. The vehicle owner will be the primary named insured, and the coverages will be the familiar ones of driver liability, collision and comprehensive. This is probably the most conservative view of the future, but still a possibility.
Prediction 2: Shared driver-driven vehicles
Shared vehicles have continually become more popular amongst consumers. Companies like Uber, Lyft, and other “Black Car” Services have become a serious force in the automobile industry. The convenience and economic benefits will continue to be a driving force in consumer decisions.
The vehicle owner could be an individual or a business, and the car insurance coverage would be for driver, liability, collision, and comprehensive. Even though an Autonomous vehicle could do the same job, it would be much more expensive to own, making shared driver-driven vehicles a more celebrated option.
Prediction 3: Personally Owned Autonomous Vehicles
In this situation, autonomous technologies are viable, safe, convenient, and affordable. Still, private ownership continues…
Consumers will use the driverless technology because it safe, reliable, and has many other rewarding functions. Still they will own the vehicle for many reasons such as convenience and pride of ownership.
This future would require a new product that Deloitte calls “personal autonomous vehicle insurance,” or “AV coverage.” The vehicle owner would require coverage for comprehensive and liability while the Manufacturer, or the operating system provider, would require a commercial policy that includes AV product liability.
Prediction 4: Shared autonomous vehicles
This future is the result of autonomous technology and shared mobility coming together.
Companies such as Uber and Lyft will most likely be the leaders of this experience by putting fleets of autonomous vehicles into use. Urban passengers will probably be the first to adopt this mode of travel since the majority of them don’t own vehicles as it is.
Over the years, shared autonomous vehicles could expand out of urban communities and into suburbs and even further.
In this case, all stakeholders would have commercial AV car insurance. The vehicle owner, likely a company such as Uber or Lyft, would require comprehensive and liability insurance. The operating system provider would likely require a commercial policy that includes AV product liability.
Wherever the future takes us it is clear that car insurance coverages are going to change in some way. It is only a matter of time before the century old insurance model begins to evolve with new technologies.
If shared autonomous vehicles become more popular like what is predicted it is very possible that we see a shift in the ratio between commercial and personal car insurance policies making it less expensive for the consumer by putting more of the burden on large manufacturers and transportation companies.
Only time will tell us what will happen to car insurance in America. What we do know is that technology will continue to advance.