“The AEV Act requires a policyholder’s insurance company to cover third-party damage caused by a self-driving automated vehicle. A policy may not exclude such damages, except for damages suffered as a direct result of software alterations made without the policyholder’s knowledge, or failure to install safety-critical software updates.”

Abstract: So far, Congress has not been able to pass regulations governing the emergence of self-driving or autonomous vehicles. Twenty-one states and the United Kingdom are leading the way. As more of these vehicles take to the highway implications will emerge for the insurance industry. Auto
insurance policies will have to determine how to insure against losses caused by nonhuman operators, commercial general liability policies will be affected when technology developers and car makers are sued for bodily injury and property damage arising from malfunctioning technology, and cyber policies could be implicated in the event of hacks or data breaches. The authors review these subjects and share their insights into what autonomous vehicle producers should consider when it comes to mitigating their risk.