An Inside Look at Responsibility in the Age of Autonomous Vehicles

What happens when the driving experience becomes automated so that the action or inaction of the vehicle itself results in an accident? By David Cummings and Lauren Gubricky

As automated driving systems become more and more standard in the automotive industry, they continue to grow in sophistication, moving from automating discrete tasks in confined circumstances (self-parking, automatic braking systems) to more advanced and comprehensive mechanization of the driving experience. . Indeed, these technologies are driving a monumental transition from a human-controlled driving experience to a vehicle-controlled driving experience.

But with this change comes important liability questions: what happens when the driving experience becomes automated so that the action or inaction of the vehicle itself results in an accident? Traditional automobile collision insurance is based on the assumption that an accident is the result of the action or inaction of the driver. Unless there are circumstances suggesting that the vehicle or its components were designed, manufactured or assembled in such a way as to cause the accident or, at a minimum, to increase the extent of the injuries, the manufacturers and Vehicle developers are omitted liability issues.

While such insurance may continue to respond to incidents involving self-driving vehicles, victims are also likely to point their fingers in another direction: to companies whose automated processes have failed to prevent – or , as some might say, directly caused – the accident. .

The shift from human to vehicle control raises important questions about liability

A changing legal landscape

As autonomous technologies advance and begin to supplant driver decision-making processes, courts are increasingly tasked with assessing the extent of manufacturer and developer liability in the event of an accident. In late 2020, the family of a man who was hit and killed by a vehicle filed a lawsuit in California seeking to hold the manufacturer liable for faulty design and failure to warn of alleged faults in its driving technology autonomous and its driving assistance functions. This case followed a similar suit that had been filed earlier that year in Florida. In this case, the plaintiffs sought to hold the automaker liable for damages related to a collision that the plaintiffs claim resulted from the failure of the vehicle’s driver assistance technologies. These cases, and others like them, underscore the risk that victims are likely to sue vehicle manufacturers and developers for such incidents.

Such exposure to liability is compounded by a recent shift in judicial thinking regarding software as a “product” for the purposes of product liability litigation.. The court in Holbrook vs. Prodomax Automation recently addressed this previously untested theory when it concluded that the software at issue was subject to product liability principles because it was an “integral” and “essential” component of the machinery causing injury.

The additional risk of cyberattacks

Businesses of all sizes are undoubtedly familiar with the ever-increasing risk of cyberattacks that can compromise the integrity of operational systems. Unfortunately, this risk can also extend to the vehicles themselves, creating another level of potential liability for self-driving vehicle manufacturers and developers. Such risks were illustrated as early as 2015 when security researchers were able to hack into a vehicle while it was driving, manipulating its systems and ultimately sending it into a ditch. As a result, industry experts have expressed lingering concerns about the infiltration of autonomous technology to cause an accident, creating liability risk even when the technology otherwise performs as intended.

Insurance implications

Following a potentially major shift in responsibilities, companies involved in all stages of autonomous vehicle production need to carefully review their respective insurance programs to ensure they properly reflect this growing and changing risk landscape. . While there are several insurance products that can cover the costs and liabilities arising from such lawsuits, this article focuses on three of the most common types of coverage: general liability, product liability, and cyber liability insurance.

General liability insurance

Most businesses carry general liability insurance as part of their larger insurance program. General liability policies provide extensive coverage for “property damage” or “bodily injury” to third parties caused by an “event”, often defined as “an accident”. This type of coverage generally obligates the insurer to retain and defend the insured in an underlying lawsuit (the “duty to defend”) and to pay for any judgments, settlements or other liabilities ( the “duty to indemnify”).

General liability policies can indeed provide coverage for the costs and liabilities associated with a product liability lawsuit for accidental bodily injury or property damage. That said, these policies cater to all types of third-party lawsuits, so it’s important to consider your business’ risk profile, including product liability considerations, and whether you’re sufficiently insured. or not.

In addition, general liability policies may contain coverage exclusions that insurers will use as grounds for denying or limiting coverage for product liability costs and liabilities, particularly if product liability issues products were not anticipated when negotiating the hedge. For example, to the extent that product liability damages involve damage to a company’s product or operations, insurers may point to the often included “your work” and “your product” exclusions, designed to guarantee that the cover is limited to damage caused to third parties. only. In addition, many general liability insurance policies contain “twin” exclusions, intended to exclude coverage for damages related to product recalls, a common (and often costly) component of product liability incidents.

As automated technologies become increasingly responsible for the operation of vehicles on the roads, companies operating in this space must be properly prepared for increased responsibilities.

Product liability insurance

Although general liability policies can provide a safety net for a product liability lawsuit, depending on a company’s exposure, particularly in light of the increased liability of software developers as a result of Holbrook — it is worth considering insurance specifically tailored to product liabilities.

Product liability insurance is often purchased as part of a larger general liability policy, but can also be purchased as a separate insurance product. This type of hedging is often referred to as “completed-operations revenue” or “completed-operations risk” coverage. While this coverage may overlap with general liability coverage, it is also designed to explicitly encompass product liability specific risks. It is important to note that the exclusions outlined above may be omitted when specifically purchasing product liability coverage, providing increased coverage for other categories of damages, such as product recall .

Of course, since this type of insurance is more narrowly tailored, it is important to confirm that your product liability insurance does not exclude coverage for software-related events; that is, it explicitly limits the “products” covered to the hardware itself.

Cyber ​​insurance

Typically, cyber insurance policies include coverage for losses resulting from data destruction, hacking, and extortion, which can include increased risks associated with attacks on vehicles. That said, it’s important to point out that cyber insurance is a highly personalized product and offerings are increasingly limited as insurers pay out increasing numbers of claims. Although some cyber policies include third-party coverage, many are limited to first-party losses, which would mean they are unsuitable for product liability claims. Companies in the automated vehicle industry should have explicit conversations with brokers and risk management professionals to ensure policies adequately cover anticipated and expected risks.

As automated technologies become increasingly responsible for the operation of vehicles on the roads, companies operating in this space must be properly prepared for increased responsibilities. Therefore, it is more important than ever to rely on risk management professionals, trusted brokers and coverage advisors to assess product liability risks, review the existing insurance program of your business and negotiate covers to ensure these developing risks are properly insured.


About the authors: David M Cummings is an attorney at Reed Smith LLP. Lauren S Gubricky is a partner at Reed Smith LLP