Insurers to compensate victims of collisions with driverless cars
Motor vehicle insurers will be responsible for paying compensation to innocent third party victims of collisions involving driverless cars under new plans outlined by the… Read more
Motor vehicle insurers will be responsible for paying compensation to innocent third party victims of collisions involving driverless cars under new plans outlined by the Government this month.
On 12 January 2017, the Government published its Response to its Consultation on proposals to support Advanced Driver Assistance Systems and Automated Vehicles which was launched by the Centre for Connected and Autonomous Vehicles last year. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/581577/pathway-to-driverless-cars-consultation-response.pdf
The Government initially proposed extending current product liability regimes to cover autonomous vehicles (“AVs”) which are expected to reach the market in the next 5 years. However, in response to feedback received in the Consultation outlining problems with the ability of product liability frameworks to provide appropriate remedies, the Government has now decided to change motor insurance laws to include the use of AVs.
The present UK motor vehicle insurance model is based on insuring the driver of the vehicle, rather than the vehicle itself. The Government Response acknowledges that while this approach has worked well for conventional vehicles, this does not work as well for AVs and it proposes an alternative insurance model for AVs.
This is the “single insurer model”. It is intended to provide innocent victims of a collision involving an AV with a clear and quick route to securing compensation and provide clarity to consumers and manufacturers of AVs around the applicable insurance requirements as and when AVs become available.
Under the single insurer model, an insurer would cover both the ‘driver’s’ (being the person responsible for the AV) use of the vehicle and the AV technology, so the driver is covered both when they are driving and when they have activated the automated driving function (“ADF”). When a collision is caused by an AV where the ADF was active, the insurer would be liable to pay compensation to both the innocent third party victim and the AV driver (if they are injured in the vehicle).
The insurer will only be able to exclude its liability to the injured AV driver if the collision resulted from the driver either –
- having made unauthorised modifications to their vehicle’s operating system; or
- failing to install required updates to the software for the vehicle’s operating system.
Readers familiar with software licensing models will notice that this approach has parallels with exceptions to liability that software licensors often stipulate in software licences – software licensors typically exclude their liability for failures arising from modifications to the software not made by the licensor and failure by the customer to install updates issued by the licensor.
The Government proposes that this is the only condition placed on this new statutory liability. Importantly, the insurer will not be able to exclude payment of compensation to a victim if the AV caused the crash as a result of the AV being hacked by a third party.
Where the manufacturer is found to be liable, the insurer will be able to recover against the manufacturer under existing common law and product liability laws. The Government Response notes that insurers would only ultimately need to cover the cost of the claims that they are not able to recover from the manufacturer, for example, if the manufacturer was able to successfully use the ‘state of the art’ defence under a product liability claim that it could not have known about a particular danger or hazard in a product by using the scientific or technical knowledge available at the time the product was made or sold.
Following the Response, the next step is for the Government to take these insurance proposals forward into the Modern Transport Bill, which is due to enter the Houses of Parliament this year. This will include a definition of AV, and the Government proposes to give the Secretary of State for Transport the power to publish a list classifying the vehicles or type of vehicles that are to be regarded as AVs and will be subject to the new insurance requirement. The Government has said it will continue to regulate in a rolling programme of reform. We can therefore expect further clarification in the regulation of AVs from the Government in the coming months.