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UK: Driverless cars: Government consultation on proposed changes to motor insurance

Helen Chapman

Helen Chapman,

London

James Richardson

12 July 2016

The Department for Transport's Centre for Connected and Autonomous Vehicles (CCAV) has begun a consultation on its proposed changes to the law surrounding liability for accidents and insurance cover to accommodate automated car technologies.

Increased use of automated car technologies will shift the nature of insurance claims. The increased safety of driverless cars should greatly reduce the number of individual accidents requiring fault between human drivers to be determined. On the other hand, if a risk affects one car, it is likely to affect all models of that car – such as an error that causes many cars in the same range to crash in a similar way or a fault which can be exploited by a cyber attacker.

The proposals in the CCAV consultation will affect both insurers and manufacturers. Where a car has crashed after a driver has handed over control to his or her vehicle, the Government are proposing to shift liability for such accidents from drivers to manufacturers. Motor insurance will remain compulsory but will include a product liability element. One aim of the CCAV consultation proposals is to amend primary legislation to ensure that insurance products will be available for automated vehicles.

The proposed changes amount to a set of smaller changes that apply only to those buying automated vehicles, rather than to the motor industry as a whole. They include (emphasis added):

  • "Extending the compulsory insurance requirements for automated vehicles so that the owner must also ensure that there is an insurance policy in place that covers the manufacturers’ and any other entities’ product liability.

  • "Requiring this additional compulsory product liability insurance for automated vehicles to also cover injuries to the ‘not at fault’ automated vehicle driver as well as passengers and third parties.

  • "To develop a system to classify an automated vehicle so that manufacturers, insurers and consumers know which vehicles this particular insurance requirement applies to."

The Government will also consult on changes to regulations (largely those concerning remote control parking) and the Highway Code.

CCAV are seeking the views of insurers and manufacturers and are open to alternative suggestions about how to change the UK's insurance framework. The consultation is one of the "waves" of regulatory reform that CCAV is considering and consulting on over the following years. CCAV acknowledge that determining liability in the event of a collision where the driving is assisted or automated to varying degrees will be complex and time consuming, and add:

"[W]e would anticipate that in practice manufacturers will make arrangements with insurers to develop insurance products that share the economic risk to support the sales of their automated vehicles. In the absence of a risk sharing arrangement between the manufacturer and the insurer, the insurer would be entitled to claim the product liability damages paid out from the manufacturer."

The consultation will run until 9 September 2016. Full details and the consultation document can be found on the gov.uk.site.

Helen Chapman

Helen Chapman,

London

James Richardson

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