Driverless cars could lower insurance premiums significantly

Driverless cars could significantly lower insurance premiums in the UK, according to Simon Douglas insurance director at the AA.

The Government recently announced that UK cities have been invited to submit bids for a share of a £10m funding pot for the trialling of driverless cars, from January 2015. Each project is expected to last 18 to 36 months.

This prospect of driverless cars on UK streets has thrown up all sorts of questions around insurance and how it will affect premiums. Douglas claims that premiums could be higher at first but long term the prospect could be good for car owners.

“Motor insurance is based on risk and much of the cost of a policy is associated with the driver – such as age, experience, past claims and convictions,” Douglas explained, in an interview with the Drum.

“If that element is largely removed then driverless cars could potentially attract significantly lower premiums than conventional vehicles, providing the technology that operates them is reliable and demonstrably reduces the likelihood of a collision.

“Underwriters will, however, want to be certain that the technology operating such cars, the opportunities for intervention by the ‘driver’ and other aspects of operation of such vehicles will present a lower risk.”