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Self-driving vehicles and the future of car insurance in Canada

A road full of driverless cars powered by artificial intelligence could soon become a reality with automated vehicles. While fully automated self-driving vehicles are not yet available to the Canadian public, Ontario’s automated vehicle pilot program to test driverless vehicles on public roadways is already well underway. In fact, autonomous vehicles with SAE Level 3 technology that are available for public purchase in Canada can now be legally driven on Ontario roads.1
With the future of autonomous vehicles already here, many drivers are wondering what impact advanced vehicle technology will have on their car insurance. Here’s what you need to know.
What is a self-driving vehicle? 
The Society of Automotive Engineers (SAE) has developed a system to define six levels of driving automation for motor vehicles—with Level 0 being no automation and Level 5 being full automation.2 For the rest of this article we’ll be referring to self-driving or driverless vehicles as those with SAE Level 5, meaning they are fully automated in all conditions without the need for a human driver.
How will self-driving vehicles impact car insurance rates?  
It’s still too early to give exact numbers on how the arrival of driverless cars on Canadian roads will impact car insurance rates. The majority of vehicle collisions today are due to human error or negligence. In a future where vehicles are capable of operating without the need for a human driver, who is responsible in the event of a collision? This is the most important question insurers are faced with when it comes to driverless cars—liability. For example, who is responsible in the event of a collision due to an automated vehicle owner's failure to install the latest software update? The owner, the manufacturer or the technology provider? 
While we can assume that the arrival of self-driving cars will result in fewer collisions, we can also assume the cost per claim will increase significantly for insurance providers. The increased time to determine who is at fault creates additional overhead, and the repair and replacement costs for advanced vehicle technology has already led to an industry-wide increase in the average cost of car insurance claims. Additionally, new technology brings with it new risks—including network failure, programming choices, hacking and cybercrime, and failure to install or update software.3
On the other hand, self-driving vehicles will have the ability to record significant amounts of data on vehicle activity. This will provide insurers with valuable information when it comes to assessing risk, managing claims and detecting fraud. 
For now, insurance companies still need more data on how the rollout of self-driving vehicles will impact car insurance premiums across the country.
What does the future of car insurance in Canada look like? 
In 2018, the Insurance Bureau of Canada (IBC) published a report on the future of insurance and automated vehicles. In the report, the IBC makes three recommendations to prepare Canadian drivers for the introduction of self-driving vehicles:

  1. Establish a single insurance policy that covers both driver negligence and the automated technology to facilitate liability claims.

  2. Establish a legislated data-sharing agreement with vehicle manufacturers and vehicle owners and/or insurers to determine the cause of a collision.

  3. Update the federal vehicle safety standards with technology and cyber security standards.

You can check out the IBC’s full report for more predictions on how the arrival of fully automated vehicles will impact Canadian car insurance policies. 
As we get closer to the time when fully automated, self-driving vehicles will be introduced to the Canadian market, the conversations surrounding safety, insurance and the regulation of these vehicles will surely intensify. Keep up with the conversation to learn how further advancements in vehicle technology may impact you and your insurance coverage. 
If you have any questions about your existing car insurance policy or would like to learn more, contact your OTIP Insurance broker at 1-833-494-0090. If you’d like to get a quote for car insurance, connect with an OTIP broker today at 1-888-892-4935

  1. Ontario Ministry of Transportation

  2. Ontario Newsroom

  3. Insurance Bureau of Canada

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