Could driverless cars change the car insurance market forever?

Driverless cars may seem like a thing of the future to some, but they may not be as far away as you might think. In fact, some research suggests that driverless cars may be on the road in less than 10 years’ time.

With the prospect of driverless cars reducing the amount of accidents taking place on the road, it is possible that this new technology will change the car insurance market forever. Drivers might no longer need to worry about insuring their car in case of accident, as the main cause of accidents – this being human error – will have been removed from the frame. If there is still a need for accident insurance then the cost of this will likely decrease as more and more driverless cars take to the roads, as the risk of accident should then – at least in theory – decrease too.

What about theft?

There will always be the need for car owners to insure against theft of course, but theft really isn’t the primary reason why car insurance premiums are so high these days. The main thing that has been pushing up the cost of peoples insurance in recent years is the amount of claims that are being made because of injuries caused by accidents on the road.

Can technology really lead to fewer accidents on the road?

You may be sceptical as to whether driverless cars can really lower the risk of accidents or not. After all, technology goes wrong too doesn’t it? While this may be true, it’s interesting to reflect upon the fact that technology is already beginning to lower the risk of accidents on the road in some ways.

Autonomous emergency braking (AEB) for example, which kicks in to stop a car if the driver does not respond in time to another car on the road or even to a pedestrian, has reduced low speed accidents by up to 20%.

We can also think about the little sensors that beep to help drivers park without bumping into other cars. This technology must have helped many people to avoid having to make insurance claims, and fewer claims should mean lower premiums going forward. There is no doubt that technology does have the potential to lower premiums in the car insurance market, and the introduction of driverless cars could be the greatest catalyst for change in car insurance that has been seen for a very, very long time.

New dangers

Of course, the introduction of electric cars onto the roads could bring new threats along with it that might need to be factored in to insurance risk premiums. The possibility of cars being hacked and even of terrorists taking cars over are just two risks which have been mentioned in the media, so perhaps we may not see as big a drop in premiums as we would expect. This is something that only time will be able to answer though, but it is almost certainly going to be an interesting few upcoming decades for the car insurance industry as a whole.

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