UK Paves the Way for Driverless Car Cover
In January 2017, the UK government announced plans to amend insurance requirements to pave the way for the introduction of automated vehicles.
The widespread use of automated vehicles on UK roads faces a number of regulatory hurdles. Under the existing UK Road Traffic Act, the user of a vehicle is liable to pay compensation in the event of an accident where they are at fault and motorists are required by law to purchase third-party liability insurance. However, incoming autonomous technology challenges this model. Who would be liable in the event of an accident caused by a driverless car?
In February, the Department for Transport revealed its vision for insurance requirements for (fully) autonomous vehicles through provisions in the Vehicle Technology and Aviation Bill.
Specifically, the government has proposed to extend compulsory motor insurance requirements to include cover for losses where the autonomous vehicle is at fault. This means that motor insurers will pay claims, in the first instance, whether it is the driver or the autonomous vehicle that causes an accident. Where the vehicle is at fault, the insurer will then be able to recover costs from the liable manufacturer. This straightforward solution protects claimants and drivers and is widely supported by the insurance industry. However, there are some significant issues to iron out.
For example, insurers will need to determine who was in charge of the vehicle at the time of an accident before they can consider seeking a recovery from a manufacturer. To make this decision, they will need prompt access to crash information recorded by the vehicle’s event data recorder.
The government has agreed that some form of legal framework for sharing vehicle event data will be required and this issue is currently being debated by international regulators.
Insurers will also need to be able to recover damages from vehicle manufacturers when the data confirms an accident is the fault of driverless technology.
Insurers could claim against a manufacturer’s product liability insurance, but this cover is not compulsory and has some limitations: for example, legal liability for faulty products only lasts ten years. Alternatively, insurers may be able to pursue a recovery under the Civil Liability Contribution Act 1978. Whichever route is used, an effective recovery mechanism will need to be in place; otherwise insurance customers and shareholders will end up footing the bill for the failings of other parties.