Does your business manufacture autonomous vehicles, supply components or software for use in autonomous vehicles, or otherwise incorporate autonomous vehicles into its business plan? For any venture involving autonomous vehicles, there are new risks that your business should understand and insure.
But first, what exactly qualifies as an autonomous vehicle? There are varying levels of automation, and before evaluating insurance options, it is important to understand the levels of automation. The Society of Automotive Engineers (SAE) has established levels of automation on a scale of 0 to 5, from no automation to full automation, respectively. The full chart created by SAE in its standard J3016 is available here.
Coverage for Manufacturers of Autonomous Vehicles or Suppliers of Components or Software for Autonomous Vehicles
As automated vehicles move from Levels 0−2 to Levels 3−5, vehicles will have more control and responsibility for monitoring the driving environment. Accordingly, accidents caused by human error will start to decrease, and lawsuits against autonomous vehicle manufacturers and suppliers of autonomous vehicle components and software will increase.
Such a lawsuit might claim that a defect in the autonomous vehicle or in a particular component or software caused the accident. To protect your business, you should examine your Commercial General Liability (“CGL”) policy to ensure that it provides adequate coverage, if at all, for product liability claims. As a supplier, your business might additionally be at risk for a lawsuit from a manufacturer seeking indemnification if it is possible that a component or software that you supplied caused the accident.
In the hopefully unlikely event that your business might want to preempt any product liability claims by recalling an autonomous vehicle, component, or software, you should ensure that you also have Product Recall coverage. CGL policies typically do not cover the expenses involved in a product recall. Suppliers should additionally ensure that they have both first-party and third-party product recall coverage to protect against any claims from buyers alleging that they have suffered damages as a result of a recall.
Coverage for Businesses Using Autonomous Vehicles
If your business uses autonomous vehicles, you should ensure that you have coverage beyond the standard automotive insurance policy. One of the first insurers to provide coverage for the owners of autonomous vehicles was Adrian Flux in the United Kingdom. Take a look at what its policy covers here. Generally, autonomous vehicle insurance should cover accidents caused by a vehicle sensor being blocked or covered up by mud or other debris, satellite outages, or a failure to timely update the vehicle’s software.
Policies should also cover accidents with more malicious causes such as hacking. Businesses should be prepared for any potential hacks of their autonomous vehicles with cybersecurity insurance, and should examine their policy to ensure that it would provide coverage in the event of: hijacking of vehicle controls, ransomware, remote vehicle theft, unauthorized entry, identity theft, privacy breaches, and the theft or misuse of personal data.
Depending on how integral autonomous vehicles are to your business, it might be a good idea to examine whether your business has adequate Business Interruption insurance. For example, if your business uses autonomous vehicles to deliver products, and all of your vehicles are hacked, that would deliver a serious blow to your business operations. If this is a possibility for your business, you should examine your policies or consult with an insurance recovery attorney to ensure that such a scenario would be covered.