Driverless car, here’s how they will be insured (according to Google)

Driverless cars will radically transform mobility, and insurance industry as well. The tricky question about who will have to pay for the policy has already been (partly) resolved by Waymo, which for its ride-sharing service will offer clients insurance coverage embedded in the service (and provided by a startup)

Published on 07 Jan 2018

Donatella Cambosu


Those who will soon have the opportunity to use Waymo‘s ride-sharing service with driverless cars, will not have to worry about paying for any personal or property damage occurred during the service: Trov, the startup that Google‘ spinoff has chosen to make its future customers travel safely, will do it.
Solutions for the “driverless-car-and-insurance” issue thus become available.
A reason why the insurance industry is so closely monitoring the progress that will soon bring driverless cars on the road is that these new vehicles will be a disruptive element in the car insurance industry, one of the most profitable segments for insurance carriers: the Wall Street Journal has assessed that only in the U.S. car insurances that are worth about 200 billion dollars today, will lose as much as 160 billion when driverless cars will arrive, thanks to the greater security offered by these vehicles that will lead to the reduction of risks and therefore of insurance costs.
Insurance has always been about driver profile and human error, resulting in new vehicles where human error no longer exists and the reliability to be considered in risk assessment is that of artificial intelligence and technology, requiring new approaches and models.
How should the new car policy be calculated without historical data and, above all, who will be responsible for taking it out? Who will be responsible for any damage caused by a driverless car? Although a 90% reduction in car accidents is expected, a slight part of the risks still remains linked to factors such as technical malfunction, unpredictable events, cyber security, etc.
However, there are those who never stop when facing such issues and do their bit: Waymo, the Alphabet-Google spinoff that recently brought on public road in Phoenix, Arizona, the driverless car without a human safety driver on board. The first of its kind was a historical test: a car completely alone in the traffic.

Therefore, Waymo is rather ahead in the race for the future transport: aiming to be functional by 2018 with a ride-sharing service, it had to solve the insurance problem by involving a startup. Trov, insurtech we talked about here, which until now addressed the end-user with micro-policies for everyday objects with Munich Re among its investors, will give insurance coverage to passengers using Waymo’s ride-sharing service, to cover loss of or damage to property and any personal medical expenses for injuries occurred during the trip. The insurance will be included in the price of the service.
In fact, the solution seems quite obvious if outlined in the ride-sharing service, but it’s also a starting point for the driverless car insurance matter, setting up the responsibility of the manufacturer (in the case of Waymo it also matches the service provider).
Waymo is not, however, the first manufacturer of innovative vehicles to take on the insurance problem: Tesla actually, after having designed and promoted in several countries an ad hoc insurance for its cars (InsureMyTesla) early in 2017 announced a plan to sell the car in the foreseeable future at a price including life-time insurance and maintenance.
Will the companies be cut out of the loop? Probably not, so far Tesla and Waymo have entered into partnerships with the Companies, it is up to the latter to understand, however, that the model has changed and must be extremely flexible and nimble. Like startups.

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Donatella Cambosu

Scrive di tecnologie, startup e innovazione da oltre 15 anni. Dal 2015 collabora con il Gruppo Digital360, in particolare con le testate Startupbusiness, University2Business, EconomyUp. Collabora con InsuranceUp sin dal lancio del portale avvenuto nel 2015 e ha maturato un'ampia esperienza in ambito insurtech.

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