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The liability conundrum
for autonomous cars

The liability conundrum for autonomous cars

Published: 23rd August 2019
Area: Corporate & Commercial
Author: Jack Fowler

With 125 million connected cars said to be shipped globally by 2022, the move towards automation is slow but definite. It is vital during these early stages of product development and adoption that manufacturers minimise their liability for any accidents that beset automated vehicles.

The UK government has stated that it is not an option to hive off autonomous cars and preserve the environment for autonomous cars only – priority must still be given to less damaging forms of transport such as the pedestrian and the cyclist.

This thinking has driven the implementation of the Autonomous and Electric Vehicle Act. It explains the following:

Where an accident is wholly or in part caused by an insured autonomous vehicle (AV), insurers will be liable for loss and damage;

Where an accident is wholly or partly caused by an AV which is driving itself at the time but is uninsured, the registered owner is liable for the loss and damage;

Neither an insurer nor owner will be liable to the person in charge of the vehicle for damage suffered by him or her if the accident was caused by the AV in circumstances where the person in charge of the vehicle used an automated mode ‘where it was not appropriate to do so’.

Liability may be limited where the accident is cause by modifications to software made by the injured party, or with their knowledge, that are prohibited under the insurance policy, or failure by the injured party to install safety critical software.

This seems to place liability either squarely with the insurer or the car owner. However, should there be any defects in the cars or driving technologies themselves, product liability or negligence claims will come into play. It is therefore still paramount for manufacturers to protect themselves.

The problem of evidence

With a hypothetical driverless car doing all or most of the driving, the potential for large product liability or negligence claims seems to be much greater, particularly in the early stages of product development.

However, evidencing any potential liability, between vehicle, driver or any manufacturer default is extremely difficult. The ‘black box’ of on-board car data will be vital to this. Expert evidence will also be required to point out any limitation in software and how any potential faults could occur.

Manufacturers therefore need to take action to protect themselves. They can do this in a number of ways:

1. Transferring risk through management of suppliers

Manufacturers should ensure that risk is effectively transferred to suppliers or partners in the chain to avoid any questions of liability being decided in court. This can be done by:

Holding harmless agreements – help ensure that contractors and suppliers are contractually responsible for their own negligence and/or errors and omissions in the case of a claim.

Statements of financial responsibility – such as certificates of insurance, these can help your company avoid bearing financial responsibility for product related claims by confirming that a contractor or supplier has the appropriate insurance in the case of a claim

2. Managing supplies and imported goods

Managing safety standards on goods across multiple jurisdictions may prove a challenge for international manufacturers. The creation of industry standards in this area will be vital for car makers to operate effectively as they have done, across borders and legal jurisdictions.

3. Building safety into design

Hazards and risks can often be eliminated or controlled in the product design phase. When designing products, a safety review should take into account how a product will be used and the kind of hazards that may result.

4.  The data question

In the event of accidents, manufacturers need to decide whether they will make the data from their own vehicles available. Data will hold the key to the successful insurance liability model.

By considering these legal aspects manufacturers can continue to deploy technologies that increase automation in vehicles with minimal fear.

For more information, contact our team.

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