UK to update motor insurance and road traffic laws to support development of driverless cars

The Department for Transport (DfT) has opened a new consultation on measures to support the development and adoption of driverless cars (41-page / 1.21MB PDF). It includes plans that might see "registered keepers" of driverless cars obliged to have insurance cover that accounts for "manufacturers’ and any other entities’ product liability" as well as "injuries to the ‘not at fault’ automated vehicle driver as well as passengers and third parties".

A new classification system could be developed to identify vehicles that are subject to the new insurance requirement, it said.

"While we are not mandating any particular model of insurance product we would anticipate that in practice manufacturers will make arrangements with insurers to develop insurance products that share the economic risk to support the sales of their automated vehicles," the DfT said. "In the absence of a risk sharing arrangement between the manufacturer and the insurer, the insurer would be entitled to claim the product liability damages paid out from the manufacturer. Insurance products will therefore be developed and be available to consumers when they purchase an automated vehicle."

The government said that it does not intend to introduce a strict liability regime to account for the rise of autonomous vehicles. It said "a fault based approach combined with existing product liability law … is the best approach for our legal system" and that "the existing common law on negligence should largely be able to adapt to this new technology".

However, it said "new rights of action directly against an insurer" could be created to "protect third parties and enable the product liability insurance proposals to function properly". The new rights of action would help plug potential gaps that could arise if "a claim in negligence against the driver who purchased that insurance policy" could not be brought, the DfT said.

"For example, if an accident occurred as a result of a defect with the vehicle we are proposing that both the driver and injured third parties will be given a right to pursue a claim directly against the driver’s insurer (even though the manufacturer rather than the driver was at fault)," the DfT said. "Similarly we are proposing that injured third parties will be given a direct right of action against the insurer where an accident results from a vehicle being hacked. In these circumstances the insurer would be able to then pursue the party at fault, or otherwise liable, to recover the costs of compensating the injured parties."

Insurers should not be able to avoid payment of damages to third party victims in cases where a driverless car owner "fails to properly maintain and update the AVT (automated vehicle technology) or attempts to circumvent the AVT in breach of their insurance policy" or uses driverless cars "inappropriately", the government said. However, it should be open to insurers to recover damages paid out from the vehicle owners in those cases, it said.

The government said insurers should also treat accidents stemming from third-party hacking of driverless cars in the same way as an accident caused by a stolen vehicle.

"This would mean that the insurer of the vehicle would have to compensate a collision victim, which could include the ‘not at fault driver’ for damage caused by hacking but, where the hacker could be traced, the insurer could recover the damages from the hacker," the DfT said.

The government's consultation also outlined proposed changes to the Highway Code to support the use of driverless cars, as well as the amendment of other regulations to enable "near to market" technologies such as remote control parking and motorway assist to be designed and operated in the UK.

The measures are the first proposed in what the government said would be a "rolling programme of regulatory reform". Its consultation is open until 9 September.

"By taking a step-by-step approach, and regulating in waves of reform, we will be able to learn important lessons from real-life experiences of driving of increasingly automated vehicles," the government said. "We can then apply these lessons when considering what further changes will be required and are appropriate to allow the safe use of technology that is yet to be developed. This will complement the lessons learnt from testing fully-automated vehicles both on test tracks and public roads, providing the government with the evidence on which to support future policy decisions."

Expert in the regulation of autonomous vehicles Ben Gardner of Pinsent Masons, the law firm behind Out-Law.com, said the consultation is "the latest in a series of moves by the government to ensure that the UK is at the forefront of the future development, testing and commercialisation of driverless vehicle technology".

"Importantly, the consultation gives manufacturers and technology and other service providers the opportunity to influence what future driverless vehicle regulations might look like," Gardner said. "However, trying to develop a new regulatory framework against the backdrop of hugely complex and rapidly developing technologies will be a challenge."

"The key will be to balance regulation and deregulation so as not to stifle development and testing whilst ensuring that the technology can be rolled out safely. Any accidents caused by driverless vehicles at this stage of their development could undermine consumer acceptance of the technology in the longer term," he said.

Gardner said there is likely to be some confusion around who is responsible for a collision involving a driverless vehicle, particularly when the driver is 'out of the loop'. He welcomed that the government has encouraged manufacturers, service providers and the insurance industry to collaborate at an early stage of the development of driverless vehicles to put in place insurance products which adequately deal with a potential shift in liability from the driver to the vehicle owner or manufacturer.

"Those in the process of, or who have an interest in, developing, testing and commercialising driver assistance and automated vehicle technologies should carefully consider the proposals set out in the consultation and how they interact with any potential products or services," Gardner said. "A close eye should be kept on regulatory developments to ensure that your driverless vehicle technologies are 'legal by design' instead of having to reverse engineer the technologies at a later date to ensure that they comply with future legislation."