How Will Self-Driving Cars & Safety Features Affect Auto Insurance?

 In Insurance Advice

From self-driving cars to blind spot alerts, emerging automotive technologies have the potential to keep us safer on the road.

Digital features that promote better decisions behind the wheel may also translate into more savings on car insurance, according to Bill Helfrecht, a Property & Casualty Agent at The Resource Center with over 35 years of experience.

Helfrecht has noticed a lot of changes since he first started in the industry in 1983, but pricing is still the key. Back then, the average cost of auto insurance was $50 per car for 6 months, and it’s risen to around $300 today. 

What can drivers expect as innovations continue to evolve?

Self-Driving Cars

Self-driving cars are expected to account for 10% of all cars on the road by 2034, according to some estimates. While autonomous or semi-autonomous vehicles could reduce accidents, they may also spur changes in how auto policies are structured.1 

For example, insurers may split liability between the driver and auto manufacturers.2 Helfrecht says rates would be broken down on a case-by-case basis, based on the worth of each individual car. 

There may also be greater emphasis on non-accident hazards like weather damage or theft. Insurers may offer cybersecurity protection in case the car’s software gets hacked. Other coverages may include product liability to guard against faulty system design, and public infrastructure to cover damage from poor road conditions such as potholes.1 

Auto Telematics

A survey from PwC found that 67% of consumers would be willing to have a sensor attached to their vehicle if doing so would lower insurance premiums.3 

Telematic devices could monitor driver behaviors in real time, assess the condition of the vehicle, keep track of mileage and collect other important data points.2 As a result, Helfrecht explains, good drivers would enjoy a discount, while those engaged in risky maneuvers would pay more.

Safety Features to Look for Now

While self-driving cars have yet to reach mainstream status, there are many technologies available right now that may boost driver safety. 

Some have expressed concerns that cars with these features may be more costly to repair, resulting in higher premiums.4 However, Helfrecht points out that every policy is unique, and that premiums are based on how much the car is worth, regardless of safety features. 

Based on his experience, he recommends the following safety features for those looking for a discount on their auto insurance: 

  • Air bags
  • Anti-lock brakes
  • Back-up features
  • Blind spot alerts
  • Lane departure systems

Other helpful features include electronic stability control, daytime running lights, crash-resistant doors and anti-theft devices.5 

Helfrecht notes that, over the next 10 or 20 years, car insurance may evolve and could become more standardized, similar to a mortgage. In other words, consumers will no longer shop around for it separately from purchasing a vehicle.  

There are many variables that help determine insurance rates, some of which could be described as discriminatory, such as age, occupation and education.  A recent bill introduced in the House of Representatives seeks to bar insurers from using some of these characteristics when setting rates.6 

Do you have questions about auto insurance? Contact The Resource Center today.

 

Sources: 

1: https://www.thesimpledollar.com/insurance/auto/how-do-self-driving-car-features-affect-your-insurance/

2: https://www.oneincsystems.com/blog/insurance-industry-12-trends-for-2020

3: https://www.pwc.com/gx/en/insurance/publications/assets/pwc-insurance-2020-and-beyond.pdf

4: https://www.npr.org/2019/06/15/728256381/why-safer-cars-dont-lead-to-cheaper-car-insurance-yet

5: https://finance.yahoo.com/news/car-insurance-2020-tips-safety-181000752.html

6: https://www.propertycasualty360.com/2019/08/21/congresswomen-seek-to-ban-education-level-occupation-and-more-from-insurance-rates-and-eligibility-decisions-414-160996/?slreturn=20200220145317

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