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Driverless cars: The transportation disrupter

Posted by   /  June 6, 2017  /  No Comments

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A look at driverless benefits, accidents, insurance and laws

By Lauren Reynolds, Rose Law Group attorney focusing her practice on Cyber Security and Dan Gauthier, law clerk

Imagine your commute to work this way: You walk out your front door, coffee and newspaper in hand, open the car door, and press the on button; after setting your destination, you read the paper and sip your coffee, while you are driven to work by your driverless car; your car drops you off and drives to a charging station, waiting for you to call for a ride home.

This hypothetical will soon become a reality. Auto manufacturers such as Audi, BMW, Ford, General Motors, Tesla, Volkswagen and others plan to release their first driverless cars – formally known as autonomous vehicles – within five years. Uber CEO Travis Kalanick has indicated the ride-hailing company’s fleet will be driverless by 2030.

Benefits

There is strong evidence supporting the benefits of driverless cars.The National Highway Traffic Safety Administration (NHTSA) says 94 percent of car crashes are caused by human error. As such, auto accidents, injuries, deaths and costs should decrease as more autonomous vehicles enter the market. In fact, a study by the Eno Center for Transportation found if just 10 percent of vehicles in the U.S. were self-driving, accidents would decrease by 211,000 each year, 1,100 lives would be saved, and related costs would decrease by $22.7 billion.  If 90 percent of U.S. vehicles were self-driving, 4.2 million accidents could be avoided, saving 21,700 lives and $450 billion per year.

Accidents

Benefits aside, driverless cars will still be involved in auto accidents. Who is liable after an accident involving a driverless car? In the past, drivers have been disproportionately liable for auto accidents.

Driverless cars take humans out of the equation; and we will no longer be responsible for avoiding accidents. Instead, that responsibility shifts entirely to the vehicle and its’ components. Since humans are responsible for most auto accidents, this shift has profound implications. First, accidents allegedly caused by driverless car systems will result in auto manufacturers and suppliers facing increased product liability claims.

Insurance

Auto manufacturers and suppliers will obtain greater product liability insurance, which may result in an increased sticker price on that new self-driving car. Second, consumer auto insurance rates should plummet. Driverless cars take the most dangerous component – the human driver – out of the equation and greatly lower the risk to insurance companies. Beyond accident liability, data privacy and security issues are more prominent with driverless cars compared to the current landscape.

Laws

It is unclear whether the public is ready for driverless cars. Existing law is clearly not. There is no federal law governing autonomous vehicles. To date, only 16 states (Alabama, Arkansas, California, Florida, Georgia, Louisiana, Michigan, Nevada, New York, North Dakota, Pennsylvania, South Carolina, Tennessee, Utah, Vermont, and Virginia) and Washington D.C. have enacted laws addressing driverless cars. These statutes typically define autonomous vehicles and establish testing and operator standards. Some address manufacturer liability, insurance, or safety standards. Only two statutes – from California and North Dakota – addresses data creation and collection, indicating that most legislatures are not considering crucial privacy and security issues. Yet these issues should be driving the autonomous vehicle discussion.

For example, driverless cars have the potential to provide real-time and historic geolocation data, revealing everywhere the owner goes, as well as everywhere he or she has been. This data would be extremely valuable to advertisers (who may be able to discern purchasing patterns based on the stores the owner visits) or insurers (who could draw conclusions about the owner’s lifestyle habits, eating habits and more). The auto industry is self-regulating with regard to data collection, ownership, retention and usage for self-driving cars, so manufacturers will only be held accountable to standards that are voluntarily adopted. Notwithstanding the issues, the technology raises, driverless cars are coming.

Driverless in Phoenix

Phoenix is a hotbed for driverless car testing. Arizona has minimal autonomous car laws – requiring only that a driver be present in the car – which makes it an ideal place to launch driverless programs. Following a registration dispute between Uber and the state of California over 16 self-driving Volvos, the ride-hailing company sent its driverless fleet to Arizona in February 2017.  In a statement, Arizona Governor Doug Ducey welcomed the fleet with “open arms and wide open roads.” In April 2017, Waymo – Google’s self-driving car initiative – launched a program to give members free full-time and on-demand access to driverless cars.

Driverless cars may be this decade’s most disruptive technology. They will offer obvious benefits, such as safer roads and convenience, however privacy and security risks that must be addressed. Moreover, driverless cars have the potential to reconfigure the auto insurance industry. As autonomous vehicle technologies are adopted, consumers must be vigilant in safeguarding their data, while legislatures should ensure the safety of their constituents through adequate privacy and security legislation.

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