Will automated vehicles lower your premiums?

Most studies suggest that automated vehicles will save lives and money, thanks to their ability to reduce accident frequency.

Self-driving cars, dubbed by many to be the wave of the future, will soon be the stuff of the present, as the U.S. government, car makers, and IT experts all say that technology's advancement has made vehicle-based automation a reality. In fact, earlier this year, the U.S. Department of Transportation announced $4 billion would be put toward expediting fully automated vehicle production to reduce greenhouse gas emissions, enhance productivity, and make the roads safer.

It's these safety enhancements that may be the biggest difference maker when driverless cars make their long anticipated appearance, saving a countless number of lives and auto insurance dollars in the process, multiple studies suggest.

Accident risk is lower with automation on board

Though fully automated vehicles may not be ready for purchase at your local dealerships quite yet, crash prevention technology is now installed in a plethora of cars that are up for sale and on the roads. In fact, enough people have used the features to determine that accident frequency is much lower among vehicles that have automated technology than don't. Based on a study released earlier this year by the Insurance Institute for Highway Safety, automatic braking reduces rear-end crashes by 40% and forward collision systems by 23%. In fact, if every car on the roads in 2013 had autobrake, there would have been 700,000 fewer rear-end accidents, the IIHS analysis revealed.

High speeds have consistently been among the main reasons why accidents happen as frequently as they do. Every year, between 30,000 and 35,000 people are killed in highway accidents nationwide, according to NHTSA.  However, last year was a particularly devastating period for these deadly collisions, as motor vehicle deaths rose 8% from the previous year to 38,300, based on estimates from the National Safety Council.

Speed governors featured in automated vehicles can help to reduce the number of people who are killed or injured in car accidents, as most accidents are attributable to driver behavior.

Premiums are expected to decline

What does this all mean for auto insurance premiums? Most studies suggest that costs will likely lessen because of fewer claims. In an analysis conducted by the RAND Corporation in 2014, cited by the Insurance Information Institute, the cost of coverage for physical damage "may become cheaper if the potentially higher costs to repair or replace damaged vehicles is more than offset by the lower accident frequency rate." Additionally, citing analysis from the National Council on Compensation Insurance, the number of workers' compensation claims stemming from car accident "should continue to drop" with fewer collisions taking place once self-driving vehicles become more mainstream.

Similar findings were discovered by professional services company KPMG. Last June, in its "Automobile Insurance In The Era Of Autonomous Vehicles," report it concluded that the decline in accident frequency would lower operational costs for insurers, and in so doing, consumers' premiums.

Nothing is for certain, but right now all signs seem to be pointing in the same direction: The era of automated vehicles looks to be a promising one, with the hope of saving both lives and dollars.