Will self-driving cars need hacker insurance?
R.J. Lehmann, Policy Expert in Insurance, Co-Founder of R Street Institute
It’s obviously a very complicated issue. Before you even get to what do you do about insurance for hacking, it’s not at all clear what you do for insurance for self-driving cars. Auto insurance traditionally has covered drivers for their driving ability, with considerations for what it’s like where you live—are there a lot of accidents? Or, is there a lot of traffic, are there a lot of auto thefts?
If you have a fully autonomous car, that changes the equation entirely because we’re no longer looking at the driving record of the person, you’re looking at the vehicle itself alone. Traditionally, that would not be covered under an auto insurance policy, that would be covered under a product liability policy. The big difference there is you as a driver buy an auto insurance policy, but the company that produces the self-driving car would buy a product liability policy.
So how states are going to work in this area and consider these issues is totally unclear at this point. A few states have passed some preliminary laws that theoretically legalize fully-autonomous cars. For the most part they have kept their existing insurance systems in place, but that would be subject to court challenges, because, let’s say you’re driving a self-driving car, and the car causes an accident that you could not theoretically have avoided. Your auto insurer is not going to want to pay that claim because that’s not what they’re insuring. If they’re held responsible for it, they’ll want to sue the maker of your car and say that they are liable for it.
Moving this forward to self-driving cars and hacking, I think that would fall under some sort of product liability system where the manufacturers would be held at some part responsible for the security of their systems. If there were a way to find out who the source of the hacking was and if that person has any money, then the product liability system would look to recover something from them. But if it’s a state that does it—say North Korea does it—then there’s probably no chance that they’re going to get anything back.