Insurance Industry Faces Uncertainty with Self-Driven Cars

May. 27, 2016 11:26a

Self-driving cars and technology are touted as the future of the automobile industry. With companies like Google investing in self-driving prototypes in the streets of California, it is just a matter of time until the rest of the country catches on with the trend. How soon this trend will catch up and what the repercussions will be, are just some of the questions that are left open for the automobile industry. These pressing queries are troubling the insurance industry as well. In this post,we will discuss how this new technology can affect insurance business.

The Impact on Insurance business

The automobile insurance sector works in simple ways. The insurance companies charge their customers a premium that depends upon the amount of coverage the customer wishes to buy. This further depends upon certain factors like age, past driving record in terms of speeding, violations and tickets, etc.

Self-driving cars, it has been theorized, will reduce the number of on-road accidents, as computers will eliminate ‘the human error’ factor that attributes to a fairly large percentage of automobile accidents. This particular fact itself could then result in a substantial reduction in the amount and the number of premiums that insurance companies will charge, with a decrease in risky driving and therefore decreasing automobile accidents. Insurance giants like Allstate Insurance are therefore contemplating their next moves with the uncertainty surrounding self-driven cars and the future of insurance claims.

Another challenge that insurance companies are facing with respect to the future is with regard to how widespread the use of self-driven cars will be. The change to self-driven cars might not be as fast either. This is due to the fact that not everyone will be willing to make the change from their conventional cars to the new ones, as not everyone will be willing to give up their old cars, either due to the fact that they will wait till it is time to change their cars, or due to mistrust of new technology. Such drivers will still be at risk of on-road accidents – especially due to the ‘human error’ factor.

In light of such a situation, insurance companies will have to maintain a liability policy premium, according to the probability of risks that non self-driven car owners pose. These customers, would then, also be charged a premium that is higher than self-driven car owners. If the adoption of self-driven cars is not as widespread and quick as, then it could be possible that the amount of premiums could be higher than anticipated.

Chicago's Mandatory Insurance Law

As per the law in Illinois, every driver on the road is required to possess a minimum automobile insurance. The specifications of this law state that any motorist is in compliance with the law if they possess an insurance that amounts to minimum $25,000 for injury / death of one individual, $50,000 for injury / death of more than one individual and $20,000 for property damage.

There will be much ambiguity with respect to these minimum amounts for self-driven car owners. Insurance companies would incur huge business losses if these minimum amounts were to be further reduced.

How an Illinois Car Accident Attorney Can Help

Whatever the future holds for self-driven cars and insurance companies – human error or not - accidents cannot be completely avoided. There could be technological errors, or even manufacturing errors that could still lead to car accidents.

If you are involved in a Chicago car accident due to the negligence of another driver, get in touch with Matthew Willens, a lawyer in Chicago. Call us today at (312) 957-4166 to set up a free consultation today.