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UK: A new insurance framework for driverless cars – Government Bill provides details

The Government has introduced the Vehicle Technology and Aviation Bill to Parliament, setting out in detail how the UK’s compulsory motor insurance framework will be amended to handle automated vehicles.

Automated vehicles pose challenges for the conventional motor insurance regime in the UK, not least if an accident occurs when a vehicle is in driverless mode. Injured parties would face difficulties in recovering directly from insurers and could face a disproportionately long and costly route through the courts to secure compensation.

The Government recently consulted on how to close these gaps. Following extensive feedback from the insurance industry, it has dropped its proposal to include an element of product liability coverage within the motor insurance framework. Current compulsory motor insurance will instead be extended to cover damage to persons (including the “driver” of the automated vehicle) and property, regardless of whether the damage results from an accident caused by conventional or automated vehicles.

The Vehicle Technology and Aviation Bill was introduced to Parliament on 22 February 2017. Part 1 of the Bill contains the insurance measures, which means that we now have clear details as to how the Government proposes the new insurance framework will operate.

The Bill provides for persons who suffer damage by an accident involving an automated vehicle to have a direct claim against an insurer. Unlike under the current third party motor insurance framework, insured persons in the automated vehicle at the time of the accident are also covered.

Persons can hold insurers liable for a wide range of damage suffered as a result of an accident, including death, personal injury and property damage. However, it will not be compulsory for policies to cover damage to the automated car itself.

Insurers may in turn pursue other parties to recover amounts paid out, such as the manufacturer responsible for the automated vehicle’s failure or the hacker who took control of the car.

Insurers will not be liable if an insured person negligently engages a driverless mode when it is not appropriate to do so. Insurers may also exclude or limit liability for damage suffered by an insured person arising from an accident which occurs as a direct result of alterations to the vehicle’s operating system made by the insured person (or with the insured person’s knowledge) or a failure to install software updates.

As with the current measures under the Road Traffic Act 1988, automated vehicles used by public bodies and the Crown will not have to be insured but, in the event of an accident involving an automated vehicle, the owner will be liable, just as an insurer would otherwise be.

Many in the industry have welcomed the Government’s proposals. We look forward to seeing exactly how motor insurance policies for automated vehicles develop over the course of this year.

The Bill does not deal with personal data concerns, so questions still remain as to how the voluminous data that will be generated by automated vehicles will be handled. The Government has stated it is considering this and engaging in international fora.

The Bill still has a long journey through Parliament, so the final form of the Bill that is to become law remains to be seen.


Vehicle Technology and Aviation Bill (HC Bill 143), Explanatory Notes and Impact Assessments

Pathway to Driverless Cars Consultation July 2016

Pathway to Driverless Cars Government Response January 2017