New UK laws address driverless cars insurance and liability

'Automated' vehicles – who pays for damage?

Robot drives a car. Conceptual illustration from Shutterstock

Insurers would be primarily responsible for paying out damages stemming from accidents caused by "automated vehicles" under new UK legislation laid before the UK parliament.

The Vehicle Technology and Aviation Bill sets out how the liability for accidents involving automated vehicles should be apportioned, and factors in whether owners of those vehicles are insured and whether they have made "unauthorised alterations" to the vehicle or failed to update its software.

Product liability expert Manoj Vaghela of Pinsent Masons, the law firm behind Out-Law.com, said the proposals represent a "sensible and positive way" of addressing potentially complicated issues of liability stemming from the use of driverless cars.

The UK government said the Bill is designed to "help the UK to become a world leader in these technologies by breaking down some of the barriers that could limit companies from testing them here", the UK government said. Insurance industry body the Association of British Insurers (ABI) has backed the plans.

Under the proposals, the UK government would be responsible for keeping a list of all automated vehicles in the UK. Motor vehicles that "are or might be used on roads or in other public places in Great Britain" and which the UK government believes are "designed or adapted to be capable, in at least some circumstances or situations, of safely driving themselves without having to be monitored by an individual", will be listed.

Only those vehicles on the list will be considered 'automated vehicles' and subject to the new insurance and liability provisions.

According to the Bill, insurers will be default liable for death, personal injury or damages to certain property which stem from accidents caused by 'automated vehicles' in self-driving mode where the vehicle is insured at the time of the accident.

Insurers would be free to try to recover the cost of damages pay-outs from vehicle manufacturers.

The extent of an insurers' liability could be limited if an injured party is responsible in any way for the accident of the damage caused by it, and insurers would not be liable at all if an accident involving a driverless car was caused by the owner's "negligence in allowing the vehicle to drive itself when it was not appropriate to do so".

Insurers would not be liable for damages stemming from accidents caused by 'automated vehicles' if the vehicle has not been insured. In those cases, the owner of the vehicle would be liable.

Under the Bill, insurers would be free to exclude or limit liability for damages caused by automated vehicles if "alterations to the vehicle’s operating system" have been made by the insured owner of the vehicle, or with their knowledge, where those alterations are prohibited under the terms of the insurance policy.

In addition, exclusions or limitations on liability would be permitted where the insured owner of a driverless car has failed to "install software updates to the vehicle’s operating system" that their insurance policy requires to be installed.

"These provisions are consumer-friendly, as it provides those that suffer damages from accidents caused by driverless cars to gain quick access to compensation and for full attribution of liability and recovery of damages pay-outs to be determined in the background by insurers, vehicle manufacturers and technology suppliers following subrogation investigations," Vaghela of Pinsent Masons said.

"One alternative of holding manufacturers' liable by default would likely cause delays to compensation being paid out from a victim's perspective, and would be less clear for all in industry," he said.

"In future, we might expect the market to evolve to a point where it is very expensive indeed for motorists to obtain insurance cover for vehicles that are not autonomous. This is still some way off as it would rely on widespread adoption of driverless cars and a clear correlation between a reduction in accidents in their use compared to vehicles operated manually," Vaghela said.

In a statement, Ben Howarth, senior policy adviser for motor and liability at the ABI, said insurers are "100 per cent committed to supporting the development of automated vehicles".

"We welcome the release of the new Vehicle Technology and Aviation Bill because it demonstrates the government’s clear commitment to moving forward when it comes to automated vehicles," Howarth said. "As an industry, we want to keep insurance as straightforward as possible, which is why insurers proposed the simple approach which the government is now taking forward."

The provisions outlined in the new Bill correspond to the UK government's policy statement on driverless cars set out earlier this year, where it backed the "single insurer model" for dealing with liability issues stemming from accidents involving driverless cars.

An industry survey carried out last year by Pinsent Masons found that nearly 80 per cent of respondents believe the UK government needs to change current laws either urgently or very urgently to facilitate driverless cars testing and use.

An earlier report published by Pinsent Masons in April 2016 identified outdated road traffic laws, complexities in patent licensing and restrictive data privacy rules as among the obstacles to the testing and adoption of driverless and connected vehicles.

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