What autopilot means for insuring at-fault accidents

How do insurers determine fault in accidents involving cars that rely at least in part on autopilot systems?

Answering that question is harder in the wake of a recent $242.5 million civil verdict in Florida, which found an autopilot feature was partially responsible for a fatal 2019 collision involving a Tesla, says Adam Mitchell, CEO of Mitch Insurance.

Plus, a recent lawsuit by Tesla shareholders alleging the vehicle maker concealed some risks of self-driving systems only adds to the confusion. The Tesla shareholders’ allegations have not been proven in court. Elon Musk, Tesla’s CEO, has dismissed the allegations, saying the car’s safety metrics are better when the Autopilot feature is engaged than when it is not.

In the meantime, no regulatory frameworks or questions on standard insurance applications exist to help brokers or carriers determine whether a client, or prospective client, will regularly use autopilot when driving high-tech electric vehicles (EVs), Mitchell says.

“Right now, in our regulatory framework, there’s only one policy, and the only mechanism [insurance providers] have is to increase prices or decrease [prices] based on risk,” he tells Canadian Underwriter. “Insurance companies are going to be waiting for these things to prove-out. Are there fewer accidents, less severity, and does that offset the increase in distracted driving or the increase in people not paying attention?”

Related: How $200+ million EV accident verdict could upend auto claims liability

Another factor affecting premium-setting is recognition of EVs’ tendency to catch fire following serious crashes. Those fires, caused by a phenomenon called thermal runaway, tend to result in total losses for the vehicles and can lead to fatalities.

“They need to actually be cordoned off well away from other things, because the fire is so intense,” Mitchell tells CU.

Ultimately, he suggests auto manufactures may have to become the purchasers of insurance coverage because the courts are deeming them liable.

“That means they have risk. And with any risk, you either self-insure or…try and transfer the risk over to an insurance company for cost,” he adds.

“Everything’s available for a certain dollar. Sometimes the cost is one-to-one, and there’s actually no savings for the risk transfer. But somebody will be willing to take this risk.”

Related: Electric vehicle claims keep rising in Canada

Or, it’s possible additional jury verdicts will follow the Florida civil lawsuit, including an ongoing appeal of that verdict, and eventually create precedent. Depending on how that goes, it could mean an untenable amount of risk and liability will be put onto auto manufacturers.

“If you [don’t] want to expose yourself to something, just leave all the liability where it [already] sits – with the person making the bad decision,” says Mitchell. “Don’t expose yourself to a place where you can incur more liability.”

Brokers and insurers must also layer on the statistical trends of EV repair costs.

“Do these vehicles ultimately become uninsurable because of all the tech?” he asks. “Do insurance costs…go so [far] through the roof that all of a sudden getting a [Mazda] Miata – there’s no tech…no confusion about driver liability – becomes really attractive? A cheap car that’s cheap to run [and] really cheap to insure.”