Baby you can drive my car, autonomously. But who pays the insurance?

Of all the necessary evils we have to go out of pocket for, is there one that’s more universally despised than car insurance?

But, baby, if you want to drive your car, you don’t really have much choice.

So we take the big deductible because, hey, we never have accidents. And then we right the big check because, hey, even with the big deductible, it still costs a ton. And maybe you have to make a claim someday, in which case it feels like a good thing to have insurance. Or maybe you never make a claim, in which case it feels like they – State Farm, Liberty, Allstate – should be writing you a big check. But of course that’s not the way insurance works. It’s just that, if you’re lucky, you won’t have anything to show for your insurance. And if you’re unlucky, then even if you get the big payoff, you’ll still have gone through a pain-in-the-butt (perhaps literally as well as figuratively) experience. (As my husband use to say about life insurance, ‘What a racket. They’re betting you’re going to live and you’re betting you’re going to die.’)

Anyway, one of the byproducts of self-driving cars will likely be the disruption of the auto insurance industry, which last year raked in nearly $200B in premiums in the US.

The big promise of self-driving cars is two-fold. One is that you’ll be able to kick back while on the road and put your makeup on, update your Instagram, and watch a video. Which is what many drivers are doing anyway, only in a self-driving car, you’ll be safe doing it. Which takes us to the next benefit of the self-driving car, which is that they’ll get in fewer accidents, most of which are caused by humans making mistakes, including but not limited to putting on makeup, updating Instagram or watching a video while driving.

With fewer accidents, insurers will have to charge less for their coverage, and premiums could fall by more than 40 percent, dragging down company profits, according to recent estimates. (Source: Boston Globe)

The reduction in accidents will reduce the payouts, so the profit drag down won’t be total. But people will, quite reasonably, expect to pay a lot less if the risk of having an accident decreases. And decrease they will. They’re already finding that automatic braking and front collision warning systems are reducing crashes by 40 and 23 percent respectively.

Fully self-driving cars won’t be barreling around the highways and byways tomorrow, but it will probably happen a lot faster than most of us expect.

For insurers, it’s going to be a big disrupter, and there are a lot of questions that will need to be answered.

You won’t be driving, so why will it be you’re responsibility if your car gets in an accident? Won’t it be the car’s fault? So why shouldn’t the car maker, or the hardware company that makes the embedded sensors that make self-driving possible, or the software companies that code up the self-driving devices, pay for the insurance?

It will take a while to get used to self-driving cars. A lot of people will still want to see the USA in a Chevrolet that they’re driving. So what happens if someone gets the urge to grab the wheel and just go? And won’t there have to be overrides for when the autonomous technology fails. Which it will. What if the “driver” was napping in the backseat and something happens? What about terrible drivers? Are they now off the hook – as long as they don’t do any actual driving?

What if you don’t keep up with the updates? What it your car is an old beater, bought second hand at one of those crummy used car lots with the plastic pennants?

The insurance companies are all over it, of course. Let’s face it, if anyone’s going to be good at risk analysis it’ll be an insurance company.

Liberty Mutual is studying autonomous vehicles and driver behavior with MIT’s Advanced Vehicle Technology Consortium and at its own lab in Hopkinton. The company has already started offering drivers discounts if cars have certain semiautonomous safety features that slow down the vehicle to avoid tailgating, trigger alarms if the driver swerves into another lane, and warn about potential blind spots.

Boston is going to be a testing ground for self-driving cars, possibly starting later this year. I know I’ll be weirded out when I see one zipping by. And I know I’ll be even more weirded out when I’m in one zipping around. Still, I’d like to see it happen in my lifetime. I won’t be an early adopter.But I do like to get in a car and go driving somewhere.

I also like to ride, so once the early adopters prove it out, I’m sure I’ll get someth8ing of a kick – in a weirded out kind of way – of being chauffered around by a car driving on its own.

As for paying insurance premiums, I haven’t owned a car in years.  When I need a car, I drive Zipcars (insurance included) and Avis rentals (I usually take an insurance option). Never say never, but I have neither the intention nor the desire to own a care ever again. Thus I may not ever have to have car insurance, ever again. But if I do, I’ll be delighted if the premiums are less than I was paying back in my car-owning days. In the meantime, I won’t be losing much sleep over whether the insurance industry is being disrupted.