Liability To Shift From Drivers To Product Manufacturers In Autonomous Future

It’s clear that based upon the growing number of newspaper articles, industry conferences, vehicle test projects, and congressional hearings surrounding driverless cars, this technology is creating quite a buzz. While driverless cars amaze and give hope for a transportation revolution, the thorny issue of who will be liable for actions when an accident occurs has taken a backseat to discussions about their benefits such as increased mobility access, reduced traffic deaths, and better fuel efficiency.

But the liability topic is of great concern to lawyers and insurance companies as autonomous vehicles are expected to upend the car insurance business as we know it, eventually taking drivers almost entirely out of the equation. Under the current system, individual motorists hold motor vehicle insurance to spread risk throughout the driver pool. Although human error causes more than 90 percent of accidents and they are likely to drop precipitously once driverless cars are deployed, unfortunate circumstances will still occur, leaving open the question of who will be liable.

A shift from the drivers to product liability appears likely. Volvo, for instance, has publicly stated that it will take legal responsibility for accidents caused by its automated vehicles. “When these cars are in autonomous mode, Volvo Car Corporation (VCC) believes the product liability should no longer rest with the driver, but should be assumed by the manufacturer,” said Anders Karrberg, Vice President of Government Affairs for VCC before a House subcommittee hearing in February. “In 2015 VCC announced that Volvo Cars will assume liability for SAE level 4 vehicles if a crash or incident is a result of a defect in the AD technology. This is of course provided that the handover is conducted properly and the car has not been misused.”

Congress and state legislatures are beginning to address this complicated issue. Finding a solution is difficult in the early stages, given that many have yet to fully understand the different implications and scenarios surrounding the new technology.

In order for the technology to be deployed, a new insurance framework needs to be crafted. During the period of transition to driverless cars, if crashes occur, they could slow the development of this technology, particularly if car and software manufacturers are overly cautious because of worries of lawsuits.

SAFE, in its National Strategy for Energy Securitylast year, argued for the federal government to put together alternative liability arrangements, pointing to the example of the Injury Compensation Program, set up in the late 1980s to help vaccine manufacturers operate in a marketplace with a mature product without having to worry about the threats of lawsuits. A similar system would apply to carmakers and software companies and would be particularly helpful in the transition period.

In the long term, Bryant Walker Smith, a law professor at University of South Carolina who specializes in autonomy, says that liability will ultimately shift from motorists to product manufacturers. “Automated driving and product liability can coexist,” he wrote in a report published last year. “In comparison to the automotive industry today, the automated driving industry will likely bear a bigger slice of a smaller pie of total crash costs.”

This development would be good news for consumers. They wouldn’t need to purchase insurance and they wouldn’t be at-fault for any accidents caused by malfunctions with their vehicles. Overall, societal costs of auto accidents are extraordinary, with the burden falling on victims, insurance companies, and governments (see graphic below).

“If automated driving reduces the magnitude of crashes, then it should also reduce the societal costs of crashes,” wrote Smith.

Still, even with reduced costs for society in general from autonomous cars, auto companies and software companies will have to take on more risks as a result of product liability. Thus, automakers would pass these liability costs onto consumers with higher sticker prices. The higher prices, unfortunately, may delay consumer acceptance of the new vehicles. “Liability exposure could conceivably lead to higher prices for automated driving systems, which could lead to slower adoption of these systems, which could lead to crash injuries that could have been prevented by these systems,” Smith wrote.

With the shift from driver negligence to product liability, manufacturers will have incentive to make reasonable safety precautions. The new liability regime will bring about a good bit of uncertainty, making it incumbent that lawmakers, the industry, and insurers make sound solutions in this area. “In simplistic terms, some may view product liability as a potential impediment to the development and adoption of automated driving systems that could save lives, while others may view product liability as a tool to ensure that these systems are responsibly deployed and continually improved,” wrote Smith.

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