In a speech delivered last week at a high level seminar on self-driving cars in Washington DC, the president and chief executive of Volvo has announced that Volvo will accept full liability whenever one of its cars is in autonomous mode and is involved in a crash.

This is an unprecedented move by Volvo to address what has been one of the most controversial aspects in relation to the development of self-driving cars.

Over the past few years, numerous carmakers including Audi, Toyota, Mercedes and General Motors (as well as technology companies such as Google) have all been busily developing next-generation autonomous cars for the future consumer. What has been a topic of much debate however has been how the courts might deal with the interesting liability situation where the high-tech computer system of an autonomous car fails and a crash occurs. Would the individual driver be deemed to retain ultimate control over and legal responsibility for the vehicle or would carmakers be open to a finding of liability?

It appears Volvo has now provided an easy answer to this question by announcing it will accept full responsibility for any crash that occurs. This comes after Mercedes and Google recently told 60 Minutes in the US that it will accept responsibility and liability for any incident if its technology is at fault.

But what will this mean for the insurance industry? For example, will a carmaker’s acceptance of liability extend to circumstances where a vehicle’s computer system is hacked and the operation of the vehicle is taken over by a third party? Will drivers of autonomous cars still require third party insurance coverage? Or will it be up to carmakers to take out extensive insurance coverage to protect against the risk of litigation being commenced against them? Gone may be the days that an insurer looks at commencing a subrogated action against the other driver involved in a car crash but rather that proceedings are commenced directly against carmakers themselves. Other interesting issues include:

  1. the liability position if a component of the computer system present in self-driving cars fails and this component was manufactured and supplied by another company;
  2. the liability position once a car goes out of its warranty period;
  3. the liability position in respect of any traffic offences which are committed while cars are in autonomous mode, for example if the car fails to correctly read a speed sign or traffic light signal;
  4. determining at what point a driver of an autonomous car might assume liability in circumstances where the driver is required to take over control of the car because the car is unable to deal with, for example, snow, heavy rain or other wayward drivers;
  5. the difficulties a prospective plaintiff might face in gathering and presenting sufficient evidence to prove negligence on the part of the carmaker; and
  6. the difficulties in proving, on the balance of probabilities, that the driver did not in any way interfere with the operation of the vehicle.

All these questions remain unanswered at this point and we will have to wait and see what impact autonomous cars will have on the insurance industry. It will also be interesting to see what conditions Volvo might attach to its announced full acceptance of liability when fully autonomous cars hit our roads in the near future and if other carmakers will follow Volvo’s lead.