What will self-driving taxis mean for taxi insurance?

taxi insurance

While many people have an uneasy feeling about the entire concept of self-driving cars, it seems inevitable that they will become an increasingly common sight on our roads in the coming decades. Property Casualty 360 published an interesting article recently, in which it was suggested by IHS that semi-autonomous

self-driving cars could be a common sight globally before 2025, followed by fully self-driving cars by the year 2030. Most strikingly, IHS research, suggests that some time after 2050, the vast majority of vehicles on the road will be self driving.

The future of taxi driving

So what does this mean for taxi drivers in the future? Seeing as their job revolves around driving people from one place to another, one might expect the profession to go the way of the dodo. But this seems unlikely for a number of reasons, at least for the duration of most of our lifetimes.

Firstly, despite many features being fully automated, some elements of manual control will remain, particularly at first as the technology develops, but even later on when the vehicles are ‘fully automated’. Just as planes on autopilot have need of a human pilot behind the controls, so too will self-driving taxis.

Some of the main reasons why people take a taxi rather than drive themselves today are because they aren’t qualified to drive, are planning on having a drink, or would simply prefer for someone else to do the driving while they concentrate on other things. As self-driving cars will from time to time require the human passenger to take control, such as in the event of a systems malfunction, it is likely that it will be a legal requirement to have a qualified and clear-headed operator behind the wheel.

In fact it seems entirely reasonable that in this age of automated road travel, car ownership might actually decrease while the number of self-driving taxis will increase. Why would people buy an expensive car that will drive them to their destination, when they can simply catch a cab that will do just the same at a fraction of the price?

Self-driving taxi insurance

This new breed of taxi drivers will of course still need insurance, as they will potentially be liable for any harm that comes to other road users and property, and their passengers. They will also need to protect themselves financially in the event that they are injured and are unable to work and support themselves. The nature of the taxi insurance may well change though as the technology develops.

In a situation in which there is a collision between two self-driving cars, who is responsible for the accident? Is it the operator of the vehicle, the vehicle manufacturer or, if applicable, the local authority or other provider of the self-driving taxi? The answer to this will inevitably vary from case to case, and will doubtlessly be the subject of a good many test lawsuits in the coming years, but as the human operator has some semblance of control, it is likely that the need for taxi insurance which covers for liability for accidents will remain essential.

The cost of insurance could also decrease dramatically, as self-driving cars are in theory less prone to error and mistakes than human drivers. On the other hand though, this decrease in risk could be tempered by the fact that a self-driving taxi is likely to be much more expensive to repair or replace than a regular vehicle.

It’s an emerging technology, and it’s likely that we won’t know the full ins and outs of self-driving car insurance for many years yet, long after the first commercially available vehicles have taken to the road. But one thing is for sure, an element of risk will remain on the road, and thus so too will the need for taxi insurance.

Marc Loud is a partner at Park Insurance, for over 30 years of experience who cover a range of specialist sectors for taxi insurance.