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Posted in Our Blog on May 13, 2023
An autonomous car with four passengers heads down a wet city street in New Orleans. A big truck coming the other way skids across the meridian and drives straight for the car. To avoid the truck, the car must swerve onto the sidewalk, but there are people strolling along there. Whatever the car does is likely to lead to serious injury or loss of life.
The insurance industry and their lawyers are used to dealing with liability involving vehicles driven by humans, where about 90% of accidents are due to human error. Autonomous vehicles (also called self-driving vehicles) will be much less accident prone. Many experts expect that they will have four-fifths less accidents than vehicles driven by humans. Autonomous vehicles, however, raise complex legal and insurance issues. For example, even if all parties agree that an autonomous vehicle caused an accident, it will be difficult to establish if the fault lay with the vehicle’s software, the hardware, the human on board, or a combination of some or all of these factors.
One solution to this conundrum proposed by the vehicle manufacturer, Volvo, among others is that when a mechanical or software issue in one of their autonomous vehicles caused an accident, they as the manufacturer will accept full liability. That solution has been welcomed by many in the industry because it is relatively simple and should facilitate the quicker roll-out of these vehicles.
The Volvo solution, however, is likely to face court challenges because, in some countries, a party cannot be held liable unless liability can be legally proven. In addition, some manufacturers may be unwilling to give blanket indemnification and may insist that if a vehicle part made by a sub-contractor is the cause of an accident, then that company should shoulder responsibility. Establishing the precise cause of an autonomous vehicle accident may sometimes be so difficult that the cost of doing so would be prohibitive. For example, a few lines of software code could have caused an accident by “instructing” the vehicle to swerve left instead of right, or to apply or not apply the brakes. Is the company that wrote the software responsible in such cases? A sensor may have failed to identify something or someone in or approaching the vehicle’s path or spotted it too late to avoid an accident. Is the sensor’s manufacturer liable in such a case? Even if the vehicle or a component part caused an accident, the owner could still be held liable if it were established that he or she had been negligent by, for example, failing to install a critical software update, driving on worn tires, or in some other way not properly maintaining the vehicle. Commercial considerations will pressurize interested parties to resolve these issues before or soon after autonomous vehicles reach the market. Most experts believe that the resolution will be the proposed Volvo solution or something similar.
In addition to legal liability issues, as the roll-out approaches, experts are examining more closely the likely implications for employment. In the direct firing line are taxi and truck drivers. So too are insurance industry employees. Vehicle insurance premiums will fall in line with the expected huge drop in road accidents and related claims. The global professional service and accountancy firm KPMG estimates that by the year 2040 the motor insurance market may have contracted by as much as 60%. The knock-on effect of such a contraction would impact employment in loss adjuster companies and law firms, both of which currently derive significant fees from assessing and litigating motor insurance claims. Furthermore, with fewer accidents happening, vehicles would last longer and so fewer vehicle salespeople, mechanics, and crash repair personnel would be employed. The likely reduction in accidents would mean a drop in road deaths and injuries, which would hit employment in healthcare.
Apart from employees in affected industries losing their jobs, autonomous vehicles should improve most people’s lives. Driverless trucks will travel to their destination without having to stop for driver rest periods, which at present is required under the law. Traveling in autonomous cars will not only be safer and more relaxed, but will also allow people to be more productive since the time and attention currently needed for driving will likely be more productively used reading, relaxing, working, eating, and, maybe sometime a bit further down the road, sleeping.