As carmakers roll the dice on an idea that could revolutionize driving, it's no surprise that folks in Nevada have become the first to join the gamble.
Last month, the Silver State authorized its Department of Transportation to create rules allowing driverless cars to travel Nevada roads. These vehicles take the steering wheel out of the hands of a human driver and turn control over to a combination of artificial intelligence software, sensors and GPS technology.
The concept of a driverless car may sound like science fiction, but it's closer to real-life fact.
At least five auto companies – Audi, BMW, General Motors, Volkswagen and Volvo –currently are testing driverless-vehicle prototypes.
And because this is a truly 21st century idea, Google has been at the forefront of the effort. The technology giant has developed its own driverless cars that already have traveled thousands of miles in test runs. Google is so fired-up about the concept that it lobbied Nevada to pass the law sanctioning driverless cars, according to a New York Times report.
Most experts say it will be several years before driverless cars take the on-ramp into the real world. But when they do, expect the trend to sweep across the nation.
This is one bit of cutting-edge behavior that is unlikely to stay in Vegas.
Supporters say driverless cars will be safer than vehicles driven by error-prone humans. Technology will keep the new cars at a safe distance from one another and eliminate common mistakes such as overcorrecting and excessive braking.
As a result, accident rates could fall dramatically. In theory, that should cause car insurance rates to sink in tandem.
But is that how it will play out?
Jean Salvatore, spokesperson at the Insurance Information Institute, says that once states allow driverless cars onto roads, "insurance companies are going to look and analyze the risk, and insurance will be made available."
Dick Luedke, a spokesperson for State Farm Insurance, says it's difficult to forecast how driverless cars will impact insurance rates. But he says State Farm – the nation's largest insurer – is likely to write policies for the cars once they hit the roads.
"We're in the business of helping people to transfer risk to us, helping people take away the possibility of large losses of money," he says. "Our inclination always is to help people with that sort of thing."
Because driverless cars have no track record, the biggest challenge for car insurance companies will be measuring risk and pricing policies accordingly.
In the short term, driverless cars are likely to be rated like any new make and model –neutrally, or in the middle of all cars "until we have greater information," Luedke says.
Traditionally, driving history has been a major factor in determining your auto insurance rates. If a trail of speeding tickets or a rash of crashes blackens your record, you pay more. Driverless cars could turn that tradition on its head, Luedke says.
"If they were driverless, I suppose we wouldn't need to rate the ability of the driver at all," he says. Luedke is reluctant to speculate on rates beyond that point.
But the rest of us can imagine a world where the traditional gap between women's lower insurance rates and men's higher costs suddenly evaporates. Perhaps cheap car insurance for young drivers also becomes a reality.
Other questions surround driverless cars and how they will be insured. For example, in a two-car accident, who will be liable if neither driver was controlling the vehicle? The Nevada law charges the state Department of Transportation with drawing up insurance requirements for driverless cars, but the transition to a driverless future is likely to keep legislators – and lawyers – busy for decades.
As Salvatore and Luedke emphasize, it's all speculation at this point. But the Nevada action also makes plain that a new future for car insurance is just around the bend.
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