As autonomous vehicle (AV) technology continues to grow in functionality and sophistication, it is only a matter of time before AVs become commercially available across Canada. The arrival of autonomous vehicles in Canada will raise a number of liability-related questions that touch on the areas of owner liability, product liability, and auto insurance. In this post, we discuss the allocation of liability in incidents involving AVs and the future of auto insurance.
The shift in driving responsibility from humans to automated systems will impact how liability is attributed in a motor vehicle collision. Current auto insurance policies are built on the notion that human error is the primary cause of motor vehicle collisions. Under the current regime, a driver may be able to recover from an incident through compensation from their insurer and, if applicable, a tort or liability claim against the other driver involved in the collision.
However, the arrival of AVs in Canada will directly challenge this current framework since motor vehicle collisions involving AVs could be caused, wholly or in part, by product malfunction. This will especially be true for incidents involving AVs with high levels of automation that require little or no interaction by drivers. As a result, injured parties may need to seek compensation through product liability claims.
Product liability claims could potentially arise through breach of contract. However, succeeding in a lawsuit for breach of contract may prove to be difficult since vehicle manufacturers might include provisions in their agreements that limit their liability. Where a third party is injured in an incident involving an AV, the third party would not have privity of contract and, therefore, would not be able to bring a claim for breach of contract. An injured party could also bring a claim in tort for negligent design, negligent manufacture, or negligent failure to warn. For example, an injured party could commence a claim for negligent design of an AV, asserting that the sensor technology caused an autonomous response that was unsafe. Although these legal avenues may be available to injured parties, securing compensation may be difficult since product liability suits are typically more complex and take longer to resolve than traditional motor vehicle claims.
To address these concerns, the Insurance Bureau of Canada (IBC) has released a paper entitled “Auto Insurance for Automated Vehicles: Preparing for the Future of Mobility” that provides three recommendations for updating the auto insurance policies and supporting legislation in Canada to accommodate AVs.
The paper recommends establishing a single insurance policy covering both driver negligence and the automated technology. In a situation where a motor vehicle accident is caused by automated technology, insurers would pay out injured parties at the outset and then have a right to recover liability payments from the party responsible (including the AV manufacturer). This policy would ensure that injured parties are receiving compensation in a timely manner and that product liability discussions are being left with the insurer who may be better able to handle the suit.
Second, the paper recommends establishing a legislated data sharing arrangement with AV manufacturers that would make certain data available to vehicle owners and/or insurers. This would assist these parties in better understanding the cause of a collision which will be crucial in making out any product liability claims. The paper outlines a series of data elements relating to the AV (e.g., speed, automated status – on/off) that should be included in the data made available.
Finally, the paper recommends that standards for automated technology be incorporated in the Motor Vehicle Safety Act (MVSA) that set out safety criteria for AVs. For example, the standards could set requirements relating to vehicle cybersecurity, collision-data recording, and crash intervention.
In the coming years, it will be interesting to see whether the recommendations set out by the IBC are put into practice and what other developments are made in the law that affect liability.
The authors would like to thank Student at Law Sandeep Patel for his assistance in preparing this update.
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