Why the Google Car Probably Won’t Lower Insurance Rates

June 06, 2014

google carThe Google Car is a hot topic right now. In case you missed it, the Google Car is a self-driving, automated vehicle that is being developed by Google. The program is making incredible leaps and the company already holds a business license in Nevada to operate as a taxi service. But aside from being one of the more interesting innovations of the 21st century, it’s being speculated that the Google Car has a positive, yet likely unintended side-effect that could impact all driving Americans should it go into large-scale production:

It could lower everyone’s auto insurance premiums.

It’s an attention grabbing headline, for sure. But is that really the case? Will drivers pay less for car insurance because the streets are filled with an ever-growing fleet of self-driving Google Cars?

How a Self-Driving Google Car Affects Car Insurance Rates

The Google Car being put into production could have two major effects that would result in lower insurance premiums. The first is that a large number of self-driving vehicles on the road, which are significantly less prone to accidents than human drivers, would reduce the odds of drivers being involved in car accidents in an amount proportionate to the total number of driverless cars on the road. What does that mean? It means that the more Google Cars there are on the road, the less risk of there being an auto accident. That translates into lower auto insurance rates.

The other effect would be that the burden of liability would shift from drivers and car owners to the self-driving car manufacturers because the cars’ safety will be dependent on its programming, not on a person manually controlling it. Liability is costly and with that expense being handled by the manufacturer instead of the driver, that translates into auto insurance savings.

By all accounts, this argument appears to make sense. But here are some other issues that may complicate things.

Why a Google Car Won’t Actually Lower Car Insurance Rates

Sure, if self-driving robot cars take over our nation’s highways, the odds of car wrecks occurring will go down, insurance rates will drop, and it won’t really matter because the manufacturer is picking up the tab anyways. Except that’s not likely to be how it goes down.

Google appears more interested in making the Google Car into an autonomous public transit vehicle like a cross between Lyft or ZipCar and the city bus. That means you aren’t likely to own one at all. But if we follow that bit of logic, then no one really needs car insurance anymore unless they are still driving a vehicle themselves.

So let’s say that you can buy a Google Car. First, the price is going to be high. Really high. So that needs to be factored into your costs ($1,000/yr savings on car insurance doesn’t make up for a car that costs $10-20k more than your average vehicle). Also, that means that there will be fewer of them on the road—which effectively negates the argument that driving suddenly becomes safer. Not to mention that Google is writing programs for these cars on a city-by-city basis. Which means it’s going to take a lot of time before there are enough of these vehicles on the road to effectively reduce the risk of accidents enough for insurance companies to alter their rating numbers.

Ouch—okay, let’s look further into the future. Let’s say Google Cars now cost $10k and everyone has one. Fine. But what happens if a tree falls on it, someone vandalizes it, or there’s some sort of mechanical/electrical issue. The cost of repairs could be expensive and repair itself could be difficult. You’re still going to need insurance to cover these things and you might have to buy extended warranties for your car that could add more to the cost.

Easier Ways to Save on Car Insurance

So you can see, the real story here is that there are too many variables at play for anyone to make any assumptions regarding the long term effects of the Google Car. If you are hoping to save money on your car insurance we have a much better approach (better, at least, than waiting 15-25 years for a prototype vehicle to go into large scale production). Read up on some easier ways to save, you know, just until you can buy that Google Car.

Learn More About Auto Insurance

When it comes to auto insurance, there are a lot of variables, a lot of unfamiliar terms, and a whole lot of peculiarities – particularly when you consider that each state has its own insurance market. Our Auto Insurance Explainers can help sort it out for you, and make more educated decisions about your car insurance.

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