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Insurance companies unsure how to face self driving cars

The U.S. automobile insurance industry brings in more than $220 billion in revenue every year and provides employment to thousands of California residents. However, recent advances in driving technology have raised the possibility that the industry may have to change drastically. The reason is self-driving cars.

Autonomous vehicles have been widely tested in California. One of their best features is their incredibly good safety profile. There have been no injury accidents reported to date, and the manufacturers feel that they will be able to keep their unblemished safety record for years. This is wonderful news for all Americans, but it represents a serious problem for the insurance industry.

The insurance industry bases its profits upon premiums paid against the risk of automobile crashes and the economic liability that comes from them. In a world without auto accidents there will be much less need for insurance. In fact, some self driving car manufacturers are choosing to carry the insurance on the vehicles themselves, leaving the consumer out of it completely. This means that if there is a car accident contributed to or caused by one of their vehicles, then they would assume full liability and pay whatever compensation may be necessary.

There are some observers who fear that the technology behind autonomous vehicles could be hacked or otherwise compromised, leading to an accident. In other cases, a self-driving car may not be able to elude another vehicle that suddenly and unexpectedly crosses the yellow line into the wrong side of the road. It is likely that accidents will continue to happen and that personal injury attorneys will thus continue to seek compensation for injured victims.

Source: Forbes, "No, Self-Driving Cars Won't Kill the Insurance Industry", Patrick Lin, April 25, 2016

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