For several decades, technology companies and auto manufacturers have been developing autonomous vehicles. 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 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
Self-driving cars are expected to impact the car insurance industry significantly. According to experts, it will likely require new car insurance laws, different rating methodologies and close collaboration between governments and insurance companies.
“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 starting to plan for the revolution of 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 pay attention to, such as determining liability after an accident, the potential to reduce crashes and more.
Who would be liable? Shifting responsibility in a self-driving world
When self-driving cars hit the road, one of the biggest challenges insurance companies face will be determining liability after an accident. If there’s no driver to control the vehicle, does that mean the car is responsible for the crash? Or the manufacturers or software developers?
“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.
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?
Some data suggest that self-driving cars have the potential to reduce accidents by around 90%. If so, coverages like collision and personal liability insurance may no longer be necessary.
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?
Experts have mixed predictions about how driverless vehicles would affect the cost of car insurance.
One opinion is that self-driving cars are expected to reduce the likelihood of accidents, which could lead 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 contrasting opinion is that self-driving cars could be much more expensive to repair, leading to pricier premiums.
“During the initial technological adoption phase, premiums may remain constant or increase due to the added expenses of repairing advanced technology,” Giranda says.
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.”
Cybersecurity risks: A new car insurance challenge
Most autonomous vehicles are connected to the internet, which allows the vehicle to process real-time data from its network 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 programs, there’s an inherent risk of cybersecurity threats, which 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 reevaluate 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 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
Introducing self-driving cars into the insurance ecosystem will require close oversight from state and local governments to keep people safe on the roads.
“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
Self-driving vehicle technology is closer than you think. Many industry professionals predict that fully driverless cars, or Level 5, will reach full adoption around 2030.
While it remains unclear how autonomous vehicles will affect the car insurance industry, several predictions stand out.
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 on autonomous vehicles will decrease, but it could take several years—or longer.
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, like cyber attack 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.
Despite the potential upside of autonomous cars, one thing is true: Most drivers remain skeptical about their use.
According to a 2024 survey from AAA, 66% of U.S. drivers fear self-driving cars. Only 9% of people trust autonomous vehicles, which could affect the demand for driverless cars.
So, it doesn’t look like the Machines from “The Terminator” are set to take over anytime soon.
Resources and Methodology
Sources
- University of Michigan Center for Sustainable Systems. “Autonomous Vehicles Factsheet.” Accessed April 2025.
- National Highway Traffic Safety Administration. “Automated Vehicles for Safety.” Accessed April 2025.
- Autonomous Vehicle Industry Association. “AVIA data shows 44 million+ autonomous miles driven and outstanding safety record.” Accessed April 2025.
- McKinsey. “Autonomous driving’s future: Convenient and connected.” Accessed April 2025.
- AAA. “AAA: Fear of Self-Driving Cars Persists as Industry Faces an Uncertain Future.” Accessed April 2025.
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