Proceed with Caution on Autonomous Vehicles

Waymo – the self-driving technology subsidiary of Google parent Alphabet Inc., – launched a self-driving taxi service in Phoenix at the end of 2018. As companies continue to speed into the autonomous vehicles space, the birth of this industry is raising unprecedented issues. Policy-makers, insurers, automobile manufacturers, employers, and others are encouraged to begin considering how the advent of self-driving vehicles will impact their business. Some of the most salient concerns are outlined below.

Who will be liable in an accident involving an autonomous vehicle?

As autonomous vehicles become more widespread, transferring decision-making from the driver to the vehicle, liability will likely shift from the driver to the vehicle’s manufacturer and/or various suppliers. To date, at least two automobile manufacturers (Volvo and Mercedes-Benz) have indicated that they would accept responsibility whenever one of their vehicles in autonomous mode is involved in a collision and their technology is at fault.

In addition to the question of responsibility, an open issue is whether a vehicle’s level of automation should impact liability. The Society of Automotive Engineers has adopted a classification system with six levels of automated driving, ranging from no automation (level zero) to full automation (level five). In a level-zero vehicle, the driver is in control of the vehicle at all times, while in a level-five vehicle, the vehicle can operate without a human driver. It remains to be seen how liability will shift along this spectrum. If a vehicle with a high level of automation requires manual software updates that an autonomous vehicle owner fails to implement, for example, who should be liable?

Moreover, the transition from driver-driven or semi-autonomous vehicles to autonomous vehicles is expected to span several decades. During this time, roads will be populated by a mix of driver-driven, semi-autonomous and autonomous vehicles, raising an entirely new set of liability questions. If a driver operates a vehicle negligently, for example, and collides with an autonomous vehicle that arguably should have avoided the accident – who will ultimately be liable, or will liability somehow be allocated between the driver and the manufacturer of the autonomous vehicle?

How will autonomous vehicles impact the insurance industry?

As autonomous vehicles begin to populate our roads, there will be fewer accidents and a likely decline in the number of accident claims filed with insurers. The number of fraudulent accident claims will probably also decrease given that insurers will be able to obtain accident data directly from the vehicle instead of from their insureds.

Although it is anticipated that autonomous vehicles will ultimately decrease demand for personal automobile insurance, as reported in the Insurance Journal, there is speculation that coverage for autonomous vehicles will initially result in billions of dollars in additional premiums for the industry relating to three specific lines of coverage: cybersecurity, product liability and infrastructure investments.

Owners of self-driving taxi fleets and other autonomous-vehicle owners will likely need to obtain cybersecurity insurance to protect against the risk of, among other things, hijacking of controls, remote vehicle theft and privacy breaches in light of the amount of data collected by autonomous vehicle technology. Second, the potential for failures in autonomous vehicles’ communications technology, software and hardware may lead to increases in product liability premiums already paid by manufacturers. Finally, with respect to infrastructure, it is expected that coverage will be needed for cloud server systems that manage traffic and roadways, as well as external sensors and signal failures.

What types of claims might autonomous vehicle manufacturers or suppliers face?

Manufacturers of autonomous vehicles may face various claims, including failure-to-warn claims, design defect claims and misrepresentation claims. A plaintiff injured in a collision involving an autonomous vehicle might allege that the vehicle should have been designed to provide driver alerts for system malfunctions. Plaintiffs may also claim that the autonomous vehicle should have been designed to avoid the accident altogether. In addition, claims that an autonomous vehicle did not live up to a manufacturer’s promises concerning the vehicle’s safety and reliability are likely to be asserted.

In light of the complex hardware and software systems associated with autonomous vehicles, allocation of responsibility for damages may be difficult. It is likely, however, that operators, manufacturers and suppliers may attempt to resolve these issues when negotiating their contractual agreements.

What labor and employment issues may arise as autonomous vehicle technology continues to grow?

Companies that have invested significant amounts of money to develop and advance autonomous vehicle technology will need to safeguard the confidentiality of their commercially sensitive information from their competitors. These companies, for example, will need to include provisions in their employment contracts prohibiting employees separating from the company from disseminating this proprietary information. Competitors hiring these employees should take precautions to avoid claims of theft of trade secrets or unfair competition.

From a labor perspective, functions that have traditionally been performed by drivers might eventually be replaced by self-driving technology. As such, labor unions that represent drivers, and the companies that currently employ them, will need to carefully renegotiate their collective bargaining agreements.

It bears noting that General Motors recently announced plans to shut down production at five plants in North America and reduce its traditional manufacturing workforce in an attempt to shift corporate resources and capital toward the next generation of electric and autonomous technology.

Who will be able to access all of the data generated by autonomous vehicles?

Autonomous vehicles will collect, transmit and use a tremendous amount of data in the normal course of their operation. Autonomous vehicles will need to communicate with other vehicles and infrastructure (i.e. sensors) for safety purposes. The messages and data sent by autonomous vehicles will generally be used for monitoring navigation, speed, location, accidents, parts and emergency notifications.

Questions concerning who may access this data must be addressed. Law enforcement, for example, may seek to utilize the data to confirm an individual’s alibi or to determine whether an individual’s vehicle was at or near the scene of a crime. Manufacturers may want to access this data for marketing purposes. Issues concerning the scope of such access and the legal requirements to obtain this data will need to be resolved. Finally, protections will be needed to prevent unauthorized use or access to personal data.

Self-driving vehicles have the potential to save lives, improve traffic conditions and increase mobility. Although it is unclear how quickly they will take over our roadways, autonomous vehicles will certainly become a major presence in the near future. The myriad industries that will be impacted by autonomous vehicles should begin contemplating how to navigate the host of issues surrounding this burgeoning industry.