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Impact of self-driving cars on insurance

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Advocates of self-driving cars believe the latest autonomous driving technology from Tesla may soon lead to safer roads. Safer roads mean fewer car insurance claims. The fewer claims, the cheaper your insurance rates, right? 

A few weeks ago, Tesla released a software update that allowed select owners access to its Full Self-Driving Beta (FSD beta) program. FSD Beta gives select drivers early access to new capabilities that are yet to become regular features on Tesla models. 

The latest program includes “autosteer on city streets,” which allows drivers to navigate through difficult urban situations without the need to steer the car with their hands! The new feature has gained a lot of attention for its promise. But could it also affect your car insurance rates? We certainly hope so

While your current car may have some level of autonomous driving features, Tesla enthusiasts say the latest update from their beloved carmaker will make roads safer by eliminating the most prevalent cause of accidents: driver error.

Check out 10 things driving a Tesla says about you

The primary benefit of self-driving cars is that a robot is safer than a human, and safer drivers mean fewer accidents. However, autonomous vehicles create issues in terms of safety, risk, and insurance. 

Fewer accidents result in cheaper auto insurance costs. But what does this mean for car insurance companies? And, more importantly, what does this mean for you? Before we answer that, let’s take a look at how insurance companies calculate your annual premium.

How do car insurance companies calculate your rate?

Insurance companies determine your car insurance rates by assessing your level of risk, as they would for any other type of insurance. For instance, when buying life insurance, the insurer considers your health and family history before setting a rate. Regardless of your carrier, most insurance companies utilize the following elements to determine your car insurance rates:

Driving history: Offenses such as running red lights increase your likelihood of an accident. And when you get into a fender-bender, you’ll need to file a claim. Therefore, insurers will review your driving record for the last few years before determining your premium.

Personal information: Young adults, men, and single people are statistically more prone to cause accidents than their older female married colleagues.

Location: You might reside in an area with a higher rate of accidents, vehicle theft, or vandalism. Even if you never experience any of these, your elevated risk leads to higher insurance costs.

Your car: Your premiums may be affected by your car’s market worth as well as the history of other drivers who possess the same type of vehicle.

Credit history: The best car insurance companies would not necessarily charge you more for insurance because your credit is poor. However, studies have proven that a low credit score is associated with a higher accident rate. Hence, bad credit could increase your premium.

Mileage: It’s all in the numbers. The more you drive, the more chances you have of getting into an accident.

Optional coverage: If you want comprehensive coverage with greater limits, you’ll have to pay more annually, just like with any other insurance product.

Insurance firms take all of the criteria mentioned above into account to calculate your car insurance premiums. However, driverless vehicles will not have drivers in the real sense of the word. Hence, you will no longer be a vital part of the equation. So, how exactly can self-driving cars help you save money on insurance?

Save on car insurance

How can self-driving cars help you save money on auto insurance?

Right off the bat, your driving record will look pristine if you drive a self-driving car. This factor alone can help you save money on car insurance. However, companies like Tesla and Waymo are still working out the kinks, such as occasionally rear-ending other vehicles, missing stop signs, and running red lights. But if companies can work these bugs out, self-driving vehicles will presumably eliminate human error that makes driving so deadly.

For instance, self-driving cars will always check their blind spots before changing lanes, decreasing the chances of a collision. Road rage will not be an issue, too, since self-driving cars will not tailgate you.

Check out 6 tips to help extend your Tesla’s battery life  

Most accidents that occur on our roads are caused by human error. Even in adverse conditions, such as fog, machines are better equipped to compensate and drive more safely than humans. Many of the elements that influence your car insurance rate consider how likely it is that you, as a human, will be involved in an accident.

Additionally, it doesn’t matter that you’re young because, again, you’re not the one driving. A low credit score is meaningless (as far as your car insurance is concerned; you should still take care of that, though) too! Opting for comprehensive coverage (which is always a good idea) will still raise your premiums, but if your chances of being in an accident decrease, you may choose less coverage.

Unfortunately, until your self-driving car can detect when it is about to be stolen and take off on its own, where you live may still play a role. But if self-driving cars can eliminate most of the variables that contribute to high premiums, consumers will pay far less on car insurance than ever before. 

Check out our blogs for info on finding top-rated airport parking, the best parking spots in your city, and affordable car washes near you.

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