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While insurers grapple with how to insure autonomous vehicles when they hit the public roads, California, the state that hosts many of the autonomous vehicle prototypes, has established insurance requirements for the testing of the vehicles.
One of the options it allows is the posting of a $5 million surety bond.
“The California Department of Motor Vehicles has promulgated a regulation dealing with the testing of autonomous vehicles and they have specific insurance requirements which must be satisfied by the designer of the vehicle, either through the purchase of commercial auto insurance or through the posting of a fairly substantial bond,” said Hilary N. Rowen, senior counsel with Clyde & Co in San Francisco.
Ms. Rowan is also an observer to the Uniform Law Commission Drafting Committee on Highly Automated Vehicles for the American Bar Association Tort Trial & Insurance Practice Section.
“For testing purposes, it is very specific from a regulatory environment what type of insurance policy you need,” said Jose Heftye, sharing economy and autonomous mobility practice leader for Marsh L.L.C. in San Francisco.
At first, “The challenge was to develop insurance programs and the right capacity for vehicles testing on public roads, which at the beginning was very, very difficult,” Mr. Heftye said. “It is now fairly straightforward to get that type of coverage,” which is still based on auto liability together with different components. Mr. Heftye was unable to provide further details due to nondisclosure agreements.
Many companies have evidently met the burden. The list of 17 manufacturers that filed the State of California Autonomous Vehicle Disengagement Reports for 2017 stretches from Baidu USA L.L.C. to Zoox Inc. and includes well-known names such as BMW A.G., Ford Motor Co., GM Cruise L.L.C. and Mercedes-Benz.
Progress in the race among established and new car manufacturers to field autonomous vehicles is challenging insurers trying to keep pace with developments in transportation.