Fall 2018

Recent Legislation Puts Self-Driving Cars in the Fast Lane

In our current political landscape, bipartisan support is a rarity. However, one topic that all parties seem to be on the same page with is giving the green light to self-driving cars.

The U.S. House of Representatives approved a bill on September 6 aimed at hastening the deployment of self-driving cars and prohibiting states from blocking autonomous vehicles. Reuters reports that the bill, “[w]ill allow automakers to obtain exemptions to deploy up to 25,000 vehicles without meeting existing auto safety standards in the first year, a cap that would rise to 100,000 vehicles annually over three years.” A similar bill had favorable feedback from the Senate in early October.

It is believed that the legislation will pass both houses of Congress by the end of 2017. If that is the case, it would be a significant change to the current law, which prohibits self-driving cars without human controls from driving on U.S. roads. Reuters reports that the bill under consideration in the House “[w]ill require automakers to submit safety assessment reports to regulators, but would not require pre-market approval of advanced vehicle technologies.” The House bill would also limit the ability of states to regulate the performance standards of self-driving cars. However, states would still be able to regulate registration, licensing, liability, insurance and safety inspections of all cars on the road.

What does this shift in the market towards self-driving cars mean for companies who provide automobile liability insurance? In the short term, likely not much. Development of self-driving cars is in the preliminary stages, and the legislation currently in the House is meant to aid the growth of the technology necessary for self-driving cars to become widespread. The hope is that self-driving cars will reduce automobile accidents and related fatalities, as the main cause of auto accidents is human error.

In the long term, however, the allocation of liability may shift from individual drivers to the corporate owners or manufacturers of self-driving cars. The bill currently in the House will leave states free to continue to regulate their respective insurance markets. Indeed, NPR has reported that the Michigan state legislature has already passed a law that “specifies an automaker assumes liability and insures every car in its fleet when driverless systems are at fault.” It is fair to expect that more state legislatures will turn to the issue in the coming years as well. The push for self-driving cars is only just beginning, and it is one we will be watching very closely for years to come.