Cars are getting safer, but insurance rates are not dropping

July 26, 2019, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Vehicle HeadlightThe new technology that has begun to appear in cars is nothing short of amazing. Lane drift technology, automatic emergency braking, smart cruise control, self-parking, collision avoidance, back up cameras – it’s all incredible when we think of where we were even 20 years ago. All of this technology is expensive though, and when a collision occurs the costs of repair skyrocket.

Experts now estimate that even a ‘simple’ fender bender with no injuries cause enormous bills. The costs of new headlights (and their technology) is about $1400. Bumpers and the sensors in them can come to a total of well over a thousand dollars. Cars now have many airbags. It doesn’t take long in a more serious accident before the car is considered a write off.

So, while the cars are much safer for people in an accident, they are much more expensive to repair. This keeps the cost of insurance higher.

Police and insurance companies agree that a major cause of accidents is distracted driving, and in recent surveys nearly half of parents admit to texting while they drive. This sets incredibly bad examples for kids who turn into drivers, and places everyone at much higher risks of injury and death.

Insurance companies and car manufacturers predict that in this period between fully self driving cars, and human driven cars, certain types of claims will begin to decrease significantly but the cost of the remaining claims will be much higher due to the repair costs of the vehicles involved.

The benefit of fully self driving cars (reduced accidents and reduced death and injury) will not be realized until they are the large majority of vehicles on the roadways. reports that:

Developing self-driving cars is of course, very expensive. Fully autonomous tech could add at least $100,000 to the price of a vehicle, while even semi-autonomous features like Tesla's Autopilot and Cadillac's Super Cruise already add $5,000 and $10,000, respectively, to the base vehicle cost.

These figures may put the tech out of reach of many Americans today. But the first self-driving cars won't be sold directly to consumers — the early adopters will be private companies and the ultra-wealthy. Once more AVs are on the road, mass adoption will lead to less expensive base models.

Tasha Keeney, a Self-Driving Car Analyst at ARK Invest, estimates that once it's widely available, the cost of fully autonomous technology will stay within $10,000 of the base sticker price. Think of it this way: the first cell phone on the market cost almost $4,000 in 1985, which adjusts to almost $10,000 today. You can buy the nicest iPhone on the market for a fraction of that price in 2018.

With self-driving cars, American culture's entire vehicle ownership model will dramatically shift. Michael Ramsey, the Research Director of Automotive and Smart Mobility at Gartner, says there's a good chance your first time in an AV will be in a ridesharing vehicle — in fact, Google's Waymo plans to roll out a robo-taxi service this year. "By 2025, [self-driving taxis] should be fairly common, though still concentrated in specific areas," says Ramsey. "By 2030, I anticipate the technology will be in regular use."

Once AV ridesharing is everywhere, it's easy to imagine two-car households going to just one car and urban one-car households dropping their cars entirely.





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