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Self-driving cars: liabilities shift to automakers when algos are driving

Businesses developing self-driving cars talk up the technology’s potential to improve road safety. They had better be right — for financial as well as humane reasons. They will bear most of the liability for crashes. Automotive groups have a long history of product recalls and compensation payouts for the failures of far simpler systems.

Alphabet’s Waymo operates robotaxis in Arizona, Tesla works feverishly on “self-driving” modes and General Motors plans to deliver autonomous vehicles by mid-decade. The push has prompted the UK’s Law Commission to propose that users of self-driving cars should have immunity from a wide range of motoring offences, including dangerous driving.

Car manufacturers have been accountable for defective vehicles since a row in the US over Ford Pinto fuel tank fires in the 1970s. The industry spent billions of dollars last decade recalling vehicles affected by the exploding airbags made by Japan’s Takata.

Liabilities for self-driving cars are less clear-cut. Owners will sometimes have to take the wheel in an emergency or in heavy rain. German lawmakers consider they should then be legally responsible. The Law Commission believes such carve-outs are unworkable.

Under the proposals, vehicle manufacturers or software developers will need sufficient funds to organise recalls and pay fines. That might stifle the emergence of innovative start-ups.

Perhaps they could buy insurance? But self-driving cars would be a greater headache for Lloyd’s of London than other speciality lines. The risks in screeds of computer code are hard to assess. There are also cyber security issues. The International Underwriting Association of London raises the nightmare possibility of numerous accidents occurring simultaneously. That could pose a risk to insurers’ solvency, the IUA says.

None of this will deter developers. China’s Geely plans to have autonomous vehicles by 2024. Volkswagen expects self-driving cars to transform the industry. It recently earmarked €89bn for electric vehicle and software development.

Carmakers will end up provisioning for claims raised by ambulance-chasing lawyers too. Asymmetries in blame culture make them vulnerable. Human errors produce 90 per cent of road traffic crashes. Only self-driving accidents attract world media coverage. As Tesla boss Elon Musk recently acknowledged, autonomous vehicle makers may not be rewarded for the lives they save. They should, though, expect to be punished for those that are lost.

The Lex team is interested in hearing more from readers. Please tell us what you think of self-driving cars in the comments section below.

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