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There is no explosion. The cost of collisions today is reflected in the car insurance, so about $100/mo. If the manufacturer were to absorb this liability at current incident rates, it would make cars about 30% more expensive (assuming $300/mo loan payments). If Google reduces the (incidence * impact) of collision by 10x, the cost will come down to $10/mo, or about 3% of the total car cost.

And in return for the modest price increase you get a self-driving car!

You're forgetting about tort damages. Insurance does not typically cover the cost of killing or seriously injuring someone. Those damages go into the millions, far exceeding the maximum coverage. Cases of serious injury and death often end up bankrupting the responsible individual.

Also consider that there are more people who can sue per accident, because humans aren't responsible anymore. Today if you're driving the car and get in a accident and it's your fault, you can't sue anyone. Now you can. That's one more party per accident, and a whole category of single-vehicle accidents than now result in lawsuits.

Commercial planes and cruise ships buy insurance to deal with these issues.

The solution is to cap the level of damages as already happens in the airline industry.

That's wishful thinking.

1. Airplanes have highly trained trained human pilots who are highly vigilant and often in semi-manual control during takeoff and landing. Not a valid comparison.

2. Typical auto insurance policies have liability limits of around $100K. In cases of serious injury or death, tort damages often exceed that tremendously and bankrupt the responsible person. The solution is to get the legislature to cap tort damages for killing someone at ~$100K? Not going to happen.

I am not too sure it won’t happen (most legislators are rather fond of large donations). There is plenty of potential to play states off against each other to get the cap through.

I do agree with you that until the manufacturers liability is solved there won’t be autonomous cars sold.

> You're forgetting about tort damages. Insurance does not typically cover the cost of killing or seriously injuring someone. Those damages go into the millions, far exceeding the maximum coverage. Cases of serious injury and death often end up bankrupting the responsible individual.

And you're forgetting that, to the extent that such injuries can be laid at the food of manufacturers' defects, manufacturers are already liable for them, and since plaintiffs are unlikely to be able to fully collect from drivers, will often be sued now, so self-driving cars don't actually change things that much.

> Also consider that there are more people who can sue per accident, because humans aren't responsible anymore.

Incorrect.

> Today if you're driving the car and get in a accident and it's your fault, you can't sue anyone.

Incorrect. If you get in an accident and suffer damages and you allege that this is due to a manufacturer's defect, this is a basis for suit against the manufacturer. Now, you won't win if the manufacturer can show by a preponderance of the evidence that the accident was your fault rather than theirs. [0]

Similarly, quite likely, in a self-driving car regime, if your car crashes you can sue the manufacturer and claim a defect was responsible, but if they can prove its the fault of something else (such as your own failure to properly maintain the vehicle), they won't be liable to you.

[0] http://www.nolo.com/legal-encyclopedia/product-liability-cla...

I think your logic is correct, but your implied outcome is probably wrong.

>"If you get in an accident and suffer damages and you allege that this is due to a manufacturer's defect, this is a basis for suit against the manufacturer."

Right now, this is an edge case. The self driving car may cause it to become common.

> The self driving car may cause it to become common.

Yes, because exactly those cases where the driver (as operator, as distinct from the -- often the same person's role as -- owner-as-maintainer) is responsible now become the manufacturer's responsibility. But, again, that's exactly what insurance covers.

But, again, we know the cost of that liability is -- its the cost of driver's insurance.

Driver's insurance is the cost of liability to drivers, whose ability to pay damages is practically capped by their own insurance coverage.

A major corporation does not have the same practical ability to cap their damages. I am not convinced it's a straight comparable cost as you keep saying. The two risks are not exactly comparable, thus I would not expect the insurance costs to be the same.

>>>Those damages go into the millions, far exceeding the maximum coverage.

I have $2 million liability coverage (in BC Canada) and it's not that unusual or that expensive - is that very uncommon in the US?

No, it's not uncommon in the US. Almost everyone who owns a house has a $1mm+ umbrella policy as part of the standard homeowner's policy.

Edit: And I rent, so I bought an explicit $2mm umbrella policy, it's $267/year. That's a lot less than my car insurance, and a bit more than my renter's insurance.

> Insurance does not typically cover the cost of killing or seriously injuring someone.

Umm... That's pretty much exactly what liability insurance covers. Even with maximums, insurance companies frequently have to pay the whole amount regardless of what the policy says.

Anyone who is collectible (i.e, who can't just declare bankruptcy in the case of a multi-million dollar settlement) should carry umbrella coverage, though, because the insurance company may try to come back to you to collect.

It's cheap compared to car insurance, and it can cover into the millions.

>and a whole category of single-vehicle accidents than now result in lawsuits.

If you're talking about single-vehicle accidents where the human is at fault, then I wouldn't be surprised if those dropped to almost zero for self-driving cars. The place where self-driving cars have the most trouble is in complex situations involving multiple moving objects; most situations where the car just runs into something, harming its occupants, would rightfully be considered a defect.

And as others have mentioned, manufacturers already factor in the cost of defects into the total cost of producing a car.

> The cost of collisions today is reflected in the car insurance, so about $100/mo.

Not true--consumer auto insurance premiums do not encompass the cost of consumer lawsuits against manufacturers, because of course manufacturers do not buy consumer auto insurance.

For example Toyota settled their unintended acceleration lawsuits for $1.2 billion dollars or so. GM's ignition switch problems cost them $900 million to settle. How much will Volkswagon's diesel fraud cost them?

None of these costs are covered by consumer auto insurance. Instead they're covered by the capital of the corporation, which ultimately comes from investors or customers.

Now imagine a self-driving world in which every accident opens up the possibility of such class action settlements. In the absence of legislation to cap damages, companies would have to set aside huge pools of money to defend and settle such lawsuits. That means less investment, lower returns, or higher prices--any of which tend to hurt the long-term viability of a company.

> Not true--consumer auto insurance premiums do not encompass the cost of consumer lawsuits against manufacturers, because of course manufacturers do not buy consumer auto insurance.

They encompass the cost of the liability that would be transferred from drivers to manufacturers if all liability that drivers have now was transferred. They don't cover the liabilities manufacturers already have, but those liabilities are an existing part of the cost of doing business in the auto industry, not something new with automated vehicles.

> those liabilities are an existing part of the cost of doing business in the auto industry, not something new with automated vehicles.

You've written this in several posts and I think it's wrong. Consumer class actions are typically done on contingency, or with 3rd party financing, which means that cases must be somewhat likely to win before they even get filed.

Thus while it's true in theory that anyone can sue an auto manufacturer in any given accident, most accidents do not result in such suits. Consider that the GM ignition switch problem caused a number of deaths over the course of years before a suit was even filed on it. Auto manufacturers self-insure based on the expected rate of such lawsuits, and they obviously have very good data about that, as the movie Fight Club so memorably illustrated.

In a fully autonomous car a driver is not making any decisions at all, so how can they be liable? The balance would certainly shift toward more suits against manufacturers.

> In a fully autonomous car a driver is not making any decisions at all, so how can they be liable?

In a fully autonomous car, the owner is making decisions about maintenance, and in almost any case of claimed manufacturer's defect, distinguishing whether the cause is, in fact, a manufacturer's defect rather than a failure of maintenance will be important.

> The balance would certainly shift toward more suits against manufacturers.

Sure, because exactly the things that drivers-as-operators (rather than owners-as-maintainers) are now liable for would usually be the responsibility of the manufacturer. The amount of liability that represents is, to a close approximation, the cost of insurance coverage for the vehicle, so its essentially transferring the cost of drivers insurance to the manufacturer (who will roll it into the purchase price.)

Not only can consumers not maintain the software in their self-driving car, under the DMCA it is criminal for them to even attempt to do so! And it is the software that is the distinguishing characteristic of a fully autonomous self-driving car.

> Not only can consumers not maintain the software in their self-driving car

(1) Maintaining a self-driving car is more than maintaining software,

(2) Even in the case of software, an owner might have responsibilities with regard to maintenance (not in the sense of "maintaining software" in the programming sense, but in the sense of ensuring that, e.g., updates released by the manufacturer are downloaded and installed -- even if this is an automated, the owner may be responsible for making sure the vehicle is kept where that process can successfully complete and not interfering with it.)

> And it is the software that is the distinguishing characteristic of a fully autonomous self-driving car.

The "distinguishing characteristic" of a self-driving car is not the only thing relevant to liability.

In many cases, the manufacturer could include software that prevents the car from operating if maintenance is out of date.

There are a lot of ways the manufacturer can increase safety that might have negative consequences. For example, what happens if a manufacturer decides that all models over 10 years old are too risky? How do you separate their legitimate desire to ensure safety in their own self interest from their desire to sell more cars?

You might need to bring a lawyer when buying a car in the future.

there can't be a class action for each accident. If a company makes a self-driving car that keeps getting into a particular kind of accident, then sure - class action city. Same as if they create a non-self-driving car that keeps getting in a particular kind of accident. What's different?

The difference is that in a fully autononomous car, every type of accident creates liability for the manufacturer.

In cars today only certain problems rise to the level of class action suits. Let's say a driver thinks there's a cat in the road and swerves and hits a tree. No lawyer is going to sue a manufacturer on contingency for that accident.

Now let's say a self-driving car does the same thing. Yes, a lawyer will take that case.

More than likely, insurance will continue to be mandatory and paid by the vehicle owner ... but seeing it drop to $10/mo would be pretty sweet! Of course, you would then be prohibited from driving the vehicle. Self-driving only if you want to see the savings.

> There is no explosion. The cost of collisions today is reflected in the car insurance, so about $100/mo. If the manufacturer were to absorb this liability at current incident rates, it would make cars about 30% more expensive (assuming $300/mo loan payments).

Except juries invariably award much larger damages against companies then against individuals; particularly when the individual is dead or permanently disabled by the accident. People will be reluctant to levy a multi-million dollar award against a reckless driver's widow, but will be perfectly happy to award it against a multi-billion dollar corporation.

Carrying liability insurance is a condition of licensure. Large insurance companies are routinely defendants in auto injury lawsuits.

> It can't just be 2X or even 10X safer than humans if the manufacturer is liable for the accident. That would EXPLODE the cost of these cars and bankrupt companies -- even if just a small fraction of today's fatal accidents due to driver error became Google's liability.

If the owner/operator bears no liability and all liability is on the manufacturer, it transfers the liability cost onto the manufacturer, but even if it is as safe (not 2× or 10× as safe), that just means the manufacturer rolls the cost to (self-, likely) insure for that liability into the purchase price (but the purchaser doesn't need to get their own insurance, so the total cost of operation to the purchaser is unaffected.)

And, of course, if a company like Google is both the manufacturer and the owner/operator (e.g., using the vehicles in an Uber-like service tied in with Google Maps and Google Now, or using them for Google Express delivery vehicles with smaller robots onboard to deliver packages to the door, or using them for Google Street View camera vehicles, etc.), operator vs. manufacturer liability makes no difference.

1. Air bags sometimes kill people who would otherwise have survived in an accident, but on balance they save lives.

2. Making air bags mandatory hasn't caused manufacturers of cars or of air bags to go bankrupt.

3. If self-driving cars cause deaths, but on balance save lives, the situation is directly analogous.

4. There will be a way to make self-driving cars work. Q.E.D.

I seem to remember that laws exist to grant immunity to manufacturers of airbags, at least if they were functioning properly. A quick Google finds lots of ambulance-chasers who talk about "defective airbags," so manufacturers aren't immune to liability if they screwed up.

Similarly, you could imagine that No Fault laws could be passed for self-driving cars that were operating within reasonable parameters. A gross error on the part of a self-driving car could still leave manufacturers liable, but as history has shown, car companies are willing to write off even gross negligence claims rather than voluntarily add safety devices to cars, calculating cost-to-fix vs cost-to-pay-off-family tradeoffs. [1]

In fact, I'd go as far as to say that, any company that doesn't offer self-driving cars in the next 15 years may as well plan to shut down or be acquired. This is going to be a must-have feature. They will figure out how to make it work for manufacturers.

The liability question will be solved. They wouldn't even let car companies go bankrupt when they (arguably) deserved to; they certainly won't let them get into a situation that kills them, and as others have rightfully pointed out, the numbers aren't even that prohibitive if they needed to self-insure.

[1] http://content.time.com/time/specials/2007/article/0,28804,1...

That is a very poor analogy. Airbags have only killed a few hundred people and in many of those cases the manufacturer was still not liable because of human error (victim was not wearing a seatbelt, was a child improperly seated in the front, etc.)

The manufacturer liability exposure for fully autonomous driving is literally several orders of magnitude greater than for airbags.

> quick Google finds lots of ambulance-chasers who talk about "defective airbags,"

That is the Takata airbag case - they manufactured defective airbag with malfunctioning ammonium nitrate inflators which exploded supersonically instead of inflating, killing 8 people. They were fined $200m just recently and have to recall and replace 400,000 airbags.

This case might actually be analogous to self-driving car issues - it was a case of a defect potentially caused through negligence in engineering, rather than airbags working as intended.

Are you saying this because manufacturers, being gigantic unsympathetic companies, would be sued for much greater damages than at-fault drivers get hit with today? Otherwise it makes no sense, TCO will come out the same whether drivers or manufacturers are liable.

Or we could learn to stop suing people over everything. I mean, gross neglect is one thing, but if it's a safer driver than I am, and it screws up, we call that an accident.

...

Nah, I'm dreaming, it's far more likely that insurance companies will set up a wide insurance program ala taxi services than it is that we'll learn to stop being litigious.

> gross neglect is one thing, but if it's a safer driver than I am, and it screws up, we call that an accident.

Exactly my thoughts. You typically have very little to go on if a company did something to you and they were not in neglect. At least in Europe/The Netherlands, I don't really know about the US. (The stories we hear is that in the US, neglect means not warning that coffee is indeed hot, or that you should not put pets in a microwave to warm them up... I don't believe that really so I'll just assume it's similar to here.)

You are assuming that, if liability in the US was a critical question, Google would not launch its project in a country with most hospitable weather and more compatible liability rules and from there, lobby for more reasonable principles in the US.

In theory this just shifts the insurance coverage from the driver to the manufacturer. The real unknown is if any insurance company will cover the manufacturer or not. I suspect that like the airline industry there will need to be a legislated cap on damages to make this work. Provided that there is insurance then there should not be any issue.

More fundamentally we should not assume that the people working on this at Google are idiots. They already know all of this and I am sure they are working with insurance companies and governments to solve this problem. Compared to the technical difficulty of making a reliable and safe autonomous vehicle this is an easy problem.

Liability of all things is "The. Critical. Question." when it comes to autonomous vehicles?

That's such an amazingly American thing to say. Do you really think that the uptake of autonomous vehicles is going to be hindered to any significant degree by what are largely U.S.-specific legal issues?

Can you imagine a world in 2060 where the U.S. decides to leave something like 10-20% of GDP on the table because of the liability aspects of their legal environment? It might hinder uptake a bit but I don't see it stopping it in the long run.

In any case regardless of what the U.S. does at that time the rest of the world is going to be driving autonomous vehicles.

In what country are you not liable for hurting someone with a car? I want to know.

New York, apparently

There's liability in a lot of countries, punitive damages aren't a thing in a lot of them

So if your autonomous car kill someone you could just say "yes, shit happens, we'll fix it, but look at how the death toll from vehicles has gone down drastically due to this technology, maybe the courts shouldn't sue us out of existence when the alternative is a drunk/distracted/incompetent human behind the wheel?".

The OP is suggesting that that's going to happen in the U.S., maybe it will, but that's not the reality in many other countries.

Punitive damages are extra compensation to discourage future behavior. Yes, these are not used in every country, but compensatory damages certainly are, and those can get pretty high.

Certainly. But for the OP's point of liability being "The. Critical. Question." to stand the question of who gets paid by whom in the event of a death by autonomous vehicle, and how much, is somehow going to be more important than all the other economic and societal benefits of those vehicles.

The U.S. has around 25% of the world's personal vehicles, what it does is certainly going to play a big part, but if it does something crazy to restrict the technology it's just going to be developed elsewhere.

Monetary compensation for "pain and suffering" damages (which is not a monetary loss) is I believe not seen nearly as much in other countries.

New Zealand. Personal injury suits are barred, and instead handled by ACC, the state accident insurance corporation [0]. Punishing negligence is taken care of in the criminal law, and product safety is regulated.

[0]: http://www.acc.co.nz/

That's just hiding the liability under "product safety regulations". Undoubtedly when there is a manufacturer defect that causes a serious injury or death, the NZ government prosecutes them.

Product liability is hardly unique to the US: you can sue a manufacturer for a defective product in a great many countries.

Volvo's CEO: "We are the suppliers of this technology and we are liable for everything the car is doing in autonomous mode. If you are not ready to make such a statement, you shouldn't try to develop an autonomous system."

So there.

At first, self-driving cars will probably be leased on operating leases, with maintenance and insurance bundled into the payments. Or maybe you own the vehicle, but there's a maintenance and insurance contract required to enable self-driving.

I don't think liability is that key here.

cost of damages = # of accidents * cost per accident

- Self driving cars should reduce the number of accidents

- Cost per accident seems independent of the kind of car you drive. If a human driven taxi hits me, I can sue the taxi company. If a self driven taxi hits me, I can sue Google. I should be able to sue for the same amount in either case.

> It can't just be 2X or even 10X safer than humans if the manufacturer is liable for the accident. That would EXPLODE the cost of these cars and bankrupt companies -- even if just a small fraction of today's fatal accidents due to driver error became Google's liability.

Right now, the insurance company is liable for the accident followed by the consumer. It'll just shift the insurance market towards manufacturers buying it [or likely self-insuring] and the cost of insuring a car will be baked into the price instead of bought aftermarket.

> Right now, the insurance company is liable for the accident followed by the consumer.

Actually, the driver is liable, but in most states (in order to be legally permitted to drive on public roads) must either have purchased insurance to cover some minimum amount of that liability or have posted a liability bond. But the insurer's obligation to pay is triggered by the driver's liability, not ahead of the driver's liability.

If it's only 10X better than humans ,and considering that professional drivers are about 10x better than the average, maybe we're better of with something like shared UBER ?

Or maybe just add self driving for the highway , especially if it's possible for the driver to get off the vehicle before entering the highway , and hop on another car entering the city ?

I (the author of the OP) have an article about accidents at http://robocars.com/accident.html looking into many of these issues.