Lexology | Borden Ladner Gervais LLP
The day when you hop into a driverless vehicle without giving it a second thought may be closer than you think.
Car manufacturers are betting heavily on autonomous vehicle technology. Toyota has committed nearly $3 billion U.S. to develop new AV software. Ford recently bought start-up Argo AI for $1 billion and will spend $4 billion on AV development through the year 2023.
There are even non-traditional players like tech companies making waves in the AV space. Case in point, the self-driving car project Google began back in 2009 is now Waymo, a wholly independent company with a fleet of self-driving SUVs and minivans.
As AV technology gains momentum, it is even influencing the way we design our cities. Construction on Quayside, Toronto’s first autonomous vehicle-only neighbourhood, is set to begin in 2020. This ambitious $50-million project, spearheaded by Alphabet’s Sidewalk Labs, will also enable data collection on a massive scale. How that data is used is just one legal issue the industry will need to come to grips with.
On the regulatory front, it is still unclear who is in the driver’s seat when it comes to autonomous vehicles. Myriad issues lie ahead for all industry players — especially insurance companies.
A Premium Impact
The rise of AVs has major implications for the Canadian insurance industry. If this new technology drives collision rates down by 40 per cent or more as predicted, insurance premiums will likely decline – and revenues along with them.
Not surprisingly, Canada’s insurers are anxious for provincial governments to come up with a fair model for insuring AVs.
One they might consider is the U.K.’s recently enacted Automated and Electric Vehicles Act. In addition to regulating the deployment of AVs, the Act extends insurance coverage to the operator of vehicles even when the vehicle is in automated mode.
This shift is significant. Currently in Canada, it is driver conduct that is insured. If a driver causes an accident, his or her insurance policy will pay for damages and injuries up to limits available under the policy. But there is confusion as to whether insurance will cover third-party damages if a vehicle was operated in autonomous mode. In order to get compensation, an injured party might have to sue the driver, the vehicle manufacturer and the makers of the various self-driving sub-systems.
The U.K.’s so-called “one policy” approach lifts that confusion. Insurance policies there must provide drivers with coverage whether their vehicle is operating autonomously or not. Because they are essentially covering both driver and manufacturer — at least as far as the injured party is concerned — U.K insurers may be able to maintain higher premiums because they are absorbing all of the risks associated autonomous vehicles, including driver behaviour and product liability. The insurer can, however, seek recovery against the manufacturer or technology provider where warranted.
Evolving Regulations Despite a number of fatal accidents involving self-driving vehicles, the U.S. National Highway Traffic and Safety Administration (NHTSA) has decided it is too early to regulate that country’s growing AV industry. Instead, it developed voluntary guidelines for designers and manufacturers, telling them what safety and other factors they should take into account. Canada has not yet followed suit, although there are signs that regulators here are moving in that direction, including the October 2018 release of guidelines for testing highly automated vehicles.
An Eye on the Future of AVs
For the legal community and those clients touched by this transportation revolution, self-driving technologies pose many fascinating legal questions. The hardest part at this early stage of the AV game is discerning which ones are critical.