For several decades, technology companies and auto manufacturers have been developing autonomous vehicles (AVs). While self-driving cars aren’t street-legal everywhere, we’re getting closer to a future where autonomous vehicles are available for purchase.
However, before self-driving cars become an option for consumers, auto insurance requirements and regulations must change. Discussions must also be held about accident liability, cybersecurity risks and how these factors will affect insurance premiums.
To learn more, we spoke to several experts about how autonomous vehicles will impact the auto insurance industry.
The autonomous vehicle revolution and its impact on insurance
Autonomous vehicles will have several important impacts on car insurance: determining who is liable after a crash, calculating premium costs and determining which coverages insurers will offer. The transition is likely to take years, and there will need to be significant changes to auto insurance regulations and the law before driverless cars become a standard part of the car insurance market, experts say.
“We’re on the brink of an incredible transformation in auto insurance,” says John Ellmore, editor of Electric Car Guide. “As automation starts to roll out, traditional car insurance as we know it will change without any recognition.”
Insurance companies are already planning for the revolution in driverless car technology. For example, some insurance carriers are testing new insurance products that collect data from autonomous cars and make personalized suggestions and offers to customers based on their driving habits and behaviors.
While experts have been making predictions about autonomous vehicles and auto insurance, we won’t know precisely how self-driving cars will affect insurance until they reach widespread adoption.
However, industry leaders agree that there are a few key issues to monitor, including how to determine liability after an accident and how to reduce the number of crashes.
Who would be liable? Shifting responsibility in a self-driving world
When cars are self-driving, liability for an accident shifts away from drivers and toward the manufacturers and software developers behind the technology. As the transition evolves, a likely near-term model is shared liability.
“Manufacturers and software developers could take more of the blame and responsibility. We could also see a hybrid model where liability depends on the level of autonomy — did the human driver have their hands on the wheel, or was the vehicle operating fully autonomously?” Ellmore says.
Quotable InsightIn a hybrid liability model, the driver would share responsibility if they had manual control, and the manufacturer would bear most of the responsibility if they did not.
Implications of self-driving cars on insurance product offerings
The topic of accident liability also begs another question: How will insurance company products be affected if autonomous vehicles drastically reduce the number of crashes?
Tesla claims that self-driving cars (with supervision) could reduce accidents by as much as 80%, according to a vehicle safety report from the company.
Ellmore says the decrease in self-driving car accidents could prompt insurance companies to change their product offerings.
“If autonomous vehicles significantly reduce crashes, insurers will have to adapt, possibly shifting from driver-based policies to product liability coverage for manufacturers,” Ellmore says.
Joe Giranda, the director of sales and marketing for CFR Classic, an international car shipping provider, agrees.
“As driving decisions become automated, insurance responsibility may result in newer kinds of claims — claims that arise from product liability rather than negligence by the driver — and require the insurers to change their coverage models,” Giranda says.
Regardless, experts believe one thing to be true: Courts and insurance companies will need to examine accountability and determine how to protect self-driving car manufacturers and their owners.
How would autonomous cars affect auto insurance premiums?
Autonomous cars could push premiums higher or lower, depending on who you ask. In the short term, rates could either stay flat or rise due to the cost of repairing their tech equipment. In the long term, however, premiums could fall significantly if the technology can deliver on its safety promises.
Some experts say self-driving cars are expected to reduce the likelihood of accidents, potentially leading to lower premiums.
“It’s predicted that the introduction of self-driving cars will decrease incidents of road accidents, which, in turn, will lower the cost of insurance premiums in the foreseeable future,” Giranda says.
The opposing view is that self-driving cars could be much more expensive to repair, leading to higher premiums.
“During the initial technological adoption phase, premiums may remain constant or increase due to the added expenses of repairing advanced technology,” Giranda says, such as cameras or sensors. Ellmore agrees.
“Initially, I would expect premiums to be very high because the technology is so new, and there will be uncertainties around liability,” Ellmore says. “But as data proves the safety of autonomous vehicles, we could see a major drop in personal car insurance costs.”
Sophie’s Tip
Near-term self-driving car insurance is likely to cost more as insurers price for uncertainty and high repair costs. Long-term, if autonomous vehicle safety data proves out, personal auto premiums could fall significantly.
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Cybersecurity risks: A new car insurance challenge
Autonomous vehicles face cybersecurity risks, such as hacking and data theft, due to their reliance on internet connectivity and complex software. These risks could require insurers to develop new coverage categories, such as cyberattack policies tailored for driverless cars.
Most autonomous vehicles are connected to the internet, enabling them to process real-time data from their networks of sensors and cameras. This connectivity is what enables the car to drive safely without human intervention.
But because self-driving cars rely on Internet of Things (IoT) devices and complex software, there’s an inherent risk of cybersecurity threats that insurance companies must address.
“Connected vehicles pose many cybersecurity threats as they are susceptible to hacking, which could result in accidents or the theft of sensitive information. As a result, insurers may need to re-evaluate their policy frameworks,” Giranda says.
Another cybersecurity risk for autonomous vehicles is theft. For example, a hacker could tap into a self-driving car’s computer and remotely drive the vehicle to their location. If this were to happen, would the theft be covered under a comprehensive car insurance policy?
Realistically, insurance companies will need to develop specific cyber insurance policies for driverless cars.
“Cyber attack damage coverage may become necessary, which will change how insurance companies assess risk evaluation and vehicle software security,” Giranda says.
The role of governmental oversight in insurance regulation
Before autonomous vehicles can be widely insured, state and federal governments will need to develop new regulations and legal frameworks to address issues of fault and cybersecurity. They’ll also need to determine whether an insurer of last resort will be necessary for drivers who can’t find coverage for their autonomous vehicles through traditional insurers.
“Policies surrounding self-driving cars must be woven into a cohesive regulatory guideline(s). Legislators may be called upon to create these policies to establish parameters defining fault attribution, cybersecurity coverage obligations and rules on the inclusion of autonomous vehicles into existing insurance systems,” Giranda says.
Creating these new regulations will require an all-hands-on-deck approach.
“Writing new laws will require the joint effort of lawmakers, insurers and manufacturers to formulate a sensible regulation that is not only fair but also practical,” Giranda says.
Additionally, governments may need to create alternative insurance options for consumers who can’t insure their autonomous vehicles on the standard auto insurance market.
“As self-driving car technology develops, states, auto manufacturers and/or the federal government may need to become an insurer of last resort if traditional carriers are not willing to underwrite the risk,” says Mark A. Kaire, an attorney at Kaire & Heffernan, PLLC, a Florida-based personal injury law firm.
Key predictions: The future of auto insurance
Most experts predict that AV insurance will be more expensive at first. Liability rules will need to be rewritten, and cyber coverage could become a standard insurance option. The biggest wildcard is public acceptance. A 2024 AAA survey found that 66% of U.S. drivers still fear self-driving cars, with only 9% saying they trust the technology.
Many experts believe the first self-driving car insurance premiums will be prohibitively expensive because the technology is new, and insurance companies must determine how to price policies. Eventually, insurance rates for autonomous vehicles will decrease, but it could take years.
Another prediction? Insurance companies will need to redefine liability for autonomous vehicles. Accidents involving self-driving cars will be much different than collisions in manned vehicles. As a result, this will change how insurers assign fault after an accident and how claims are paid out. State governments must pass new laws to define liability and insurance laws.
Similarly, many industry leaders believe that car insurance could evolve to include other types of coverage, such as cyberattack coverage for breaches and hacks. Self-driving car manufacturers might also have to carry product liability insurance to cover their responsibilities if it’s determined that a vehicle malfunction caused an accident.
Quotable InsightTwo-thirds of U.S. drivers still fear self-driving cars (AAA: 2024). Traditional auto insurance will remain standard for most drivers for years to come.
Frequently Asked Questions: Autonomous vehicles
How will autonomous cars affect car insurance rates?
Car insurance rates will likely go up in the short term as more people adopt the technology and insurers figure out how to price the risk and the higher repair costs associated with it.
What happens to accident liability with a self-driving car?
Experts predict a hybrid liability model, where the driver takes more responsibility if the vehicle is operating in manual mode, and manufacturers take more responsibility if the car is operating autonomously.
What does Level 5 autonomy mean?
When discussing self-driving cars, “Level 5 autonomy” means the vehicle is fully autonomous and able to operate without driver oversight.
Are autonomous cars legal in the U.S.?
There is no federal law governing the use of autonomous cars, so their legality varies by state. Twenty-nine states allow the deployment of some form of self-driving car.
Resources & Methodology
Sources
- University of Michigan Center for Sustainable Systems. “Autonomous Vehicles Factsheet.” Accessed May 2026.
- National Highway Traffic Safety Administration. “Automated Vehicles for Safety.” Accessed May 2026.
- Autonomous Vehicle Industry Association. “AVIA data shows 44 million+ autonomous miles driven and outstanding safety record.” Accessed May 2026.
- McKinsey. “Autonomous driving’s future: Convenient and connected.” Accessed May 2026.
- AAA. “AAA: Fear of Self-Driving Cars Persists as Industry Faces an Uncertain Future.” Accessed May 2026.
- Tesla. “Full Self-Driving (Supervised) Vehicle Safety Report.” Accessed May 2026.
- NHTSA. “Levels of Automation.” Accessed May 2026.
- National Conference of State Legislatures. “Autonomous Vehicles | Self-Driving Vehicles Enacted Legislation.” Accessed May 2026.
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