How self-driving cars could change insurance
September 27, 2016
With a large number of autonomous vehicles on the road, human errors resulting in accidents could be drastically reduced.
Like any other routine expense, auto insurance is a necessary one that serves an important purpose. At the same time, everyone who pays into an insurance plan would like to get the best possible deal on it—that's just financial common sense. With the way technology is developing, however, drivers may soon see their auto insurance rates fall significantly. This feat will be made possible because drivers will hardly be considered drivers anymore.
"Autonomous cars will likely become a common sight on roads everywhere.”
One of the hottest targets for research and development in the world is the self-driving car. Even today, a vehicle that can operate itself without human intervention seems like a far-off dream to most of us. The truth is that it's probably happening much sooner than we think, and it could change society in a number of ways—including how we pay insurance.
If you've bought a new car in the last few years, you probably have already gotten a taste of autonomous driving. Cruise control now comes standard on most vehicles, but that's nothing new. Recently, car makers have implemented technology that takes this basic concept many steps further. Some cruise control features can now match the speed of traffic around the car, keeping a safe distance from drivers in front, as Autoguide explained. A number of safety features that put computers in a more active role have also become widely available. Some systems can automatically apply the brakes if an object gets too close to the front bumper, or swerve away from another vehicle approaching in its blind spot. It's now possible for onboard computers to even sense when drivers may be falling asleep at the wheel, and alert them accordingly.
What's next for self-driving vehicles?
Autonomous cars have come a long way in a short time, and this could have profound effects on how drivers insure their vehicles. According to insurance firm Aon, once self-driving technology becomes widespread, insurance premiums could fall as much as 40 percent. That's because with a large number of autonomous vehicles on the road, human errors resulting in accidents could be drastically reduced. Once self-driving cars become the norm rather than the exception, they should also have the ability to “talk" to one another, allowing them to do even more to prevent accidents. Imagine if your car, and each one around it, knew you wanted to change lanes before you did.
With each passing year of new vehicles, it's becoming clear that autonomous cars will inevitably become a common sight on roads everywhere. The question then is not a matter of if, but when? According to most estimates from insurance experts, it's still probably a long way off. As Bloomberg reported, current estimates put insurance premiums at a 20 percent lower rate by 2035, compared to average rates this year. Savings may not reach the 40 percent mark for some time after that.
As technology improves, it will mean enormous benefits for most people's financial health, as well as their physical wellbeing on the road. With less accidents, insurers will not need to spend nearly as much time and money covering claims and coordinating benefits. These savings will inevitably get passed onto the consumer. But besides a healthy discount on auto insurance, perhaps the most valuable part of this bargain is the potential savings from the added peace of mind on the part of passengers and pedestrians. With an efficient network of self-driving cars, it seems like everyone stands to benefit in this futuristic scenario.