Highly autonomous trucks are beginning to roll out on specific U.S. routes, but the advancing technologies leave insurers with a new challenge. How do they adjust insurance policies to cover situations in which human driving experience and decision-making are not the only factors to consider after something goes wrong?

Lisa Arseneau, commercial producer at Staebler Insurance, doubts fully autonomous vehicles will become commonplace anytime soon. But she believes insurance policies will need to change significantly as the numbers increase. Sensors and related technologies, designed to reduce the frequency and severity of accidents, will also cost more to repair in cases where they are damaged, leading to bigger insurance claims.

For now, even the most automated trucks still require safety drivers at the controls. She even wonders how Canadian underwriters will estimate related risks and insure them with the added human touch.

Her guess is that there will ultimately be two types of insurance for autonomous vehicles: one for autonomous technology and another for traditional drivers. In case of an accident, these two insurance types will need to “marry each other” to determine responsibility and handle claims.

New layers for insurance exposure

The traditional concept of auto insurance is “neat and tidy”, but the multiple sensors and software that take over at least a portion of driving responsibilities are adding new layers to the different types of exposures, says Steve Miller, managing partner and innovation’s lead at Insurance Office of America (IOA).

Insurers typically rely on historical loss data to project future losses and set appropriate premiums, he adds. “They’re towing this line between needing to be on the forefront of the technology because it will impact them in the future, but also not knowing really how to price it or how the most scenarios are going to play out.”

Autonomous trucking includes multiple layers of liability, including fleet operators, software developers, and original equipment manufacturers, he says. If an accident occurs because a truck maneuver was poorly executed, the trucking company faces auto liability exposure. If the problem was caused by an error in the software code, its developer would have product liability exposure. The OEM would face exposure associated with defective or failing equipment.

“The reality is, the auto insurance is always going to pay first and it’s going to subrogate back through the other avenues,” Miller says.

“It is unclear how the [insurance] industry might develop new products to address autonomy as a technology, but it’s crystal clear how we operate now, where we have an OEM and Tier 1, 2, 3, and whatever suppliers and developers.”

A place for ‘vehicle wraparound’ insurance?

Miller says one of the ongoing conversations in the U.S. involves ‘vehicle wraparound’ insurance — like the owner-controlled insurance programs (OCIP) that are common in the construction industry. Those insurance policies for buildings include contributions from everyone involved in a project. It’s a simplified approach that covers everyone through one holistic package and reduces legal costs.

But there will be limits to how that can work in trucking because there are thousands of parts in any given truck, and insurance is designed to spread risk.

“So you’re not going to have one insurer that wants to take on whether or not the buttons to control the window up and down go bad,” he says. “It has to be limited.”

While autonomous technologies introduce new questions like these, there are hopes that they help reduce the frequency and severity of accidents. That would be welcome to insurers who lose money because of the rising cost of claims.

“I actually think you might end up with tiered pricing for the smart vehicles versus ‘the dumb’ vehicles, for lack of a better terminology. And their current unit pricing might be a little bit different in terms of auto insurance,” says Amisha Vadalia, vice-president of operations at Plus, a California-headquartered autonomous truck developer.

Sensors can help determine liability

Data collected through 360-degree sensors and telematics equipment will come in handy while determining who’s at fault for a collision or malfunction, helping determine liability more quickly, she says. Plus equipment, for example, draws information from cameras, radar, lidar, GPS, and inertial measurement unit (IMU) sensors.

As for those who are worried about technology failing while an autonomous truck is on the road, Vadalia points to failsafe equipment and redundant systems Plus has in place. If a technology fails on its trucks, the vehicles can still do things like pull off to the side of the road or come to a complete stop, she says.

While insuring highly autonomous vehicles can be tricky, Miller says it is still doable, and encourages carriers to focus on the bright side. He emphasizes that despite potential imperfections, the goal is to improve safety and reduce the severity and frequency of accidents on the road.

He quotes the French philosopher Voltaire: “Let’s not make perfect the enemy of better.”

There are about 30,000 to 40,000 traffic fatalities in the U.S. every year, he says.

Not perfect, but better

“I’d say we need to kind of come off that idea that they [AVs] are going to be perfect. They are not going to be flawless, and there’s not going to be [zero] injury or death… It’s not a perfect solution, but it’s a lot better than what we’re dealing with now.”

In the meantime, Miller says fleets should invest the time to understand the evolving technology and find insurance experts who can help bridge any knowledge gap.

Vadalia agrees that a well-versed broker can help address questions about parameters like testing procedures, exposure, risk sharing, liability, and any indemnification language in contracts.

Adds Miller: “Going back to their broker that’s been writing their trucking insurance for 20 years is not necessarily going to be the right access point.”