How $200+ million EV accident verdict could upend auto claims liability

A recent $242.5-million civil verdict involving a vehicle manufacturer highlights some of the insurance risks that exist because of the uncertain regulatory environment in which these innovative vehicles operate.

A Florida jury determined the vehicle’s autopilot system was at least partially responsible in a 2019 crash of a sedan that struck an unoccupied vehicle and two pedestrians who were near the car at a dead-end intersection in Key Largo, Fla. One pedestrian was killed, and the other was seriously injured.

The vehicle’s driver had dropped his mobile phone and was scrambling to pick it up when the accident occurred. He told the court he’d believed the car’s autopilot system would stop the vehicle if an object was in its way. As a result, the automaker has been assigned a portion of the damages to the plaintiff.

Although an appeal has been filed, “for the time being, it’s a binding decision and constitutes precedent,” says Adam Mitchell, CEO of Mitch Insurance. And the legal action does highlight potential regulatory gaps and questions in both Canada and the U.S. around whether drivers or manufacturers are liable in cases where drivers rely on cutting-edge technology.

“While there are state-by-state or province-by-province rules, there aren’t any federal regulations about what a self-driving function is expected to do,” he tells CU. While both Canada and the U.S. have federal-level safety guidelines for autopilot systems, that contrasts with prescribed federal rules around things like crash safety requirements, use of seat belts, and performance requirements for brakes and airbags.

“There’s not similar things around self-driving,” Mitchell adds. “They’re just governing by their own liability.”

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In Canada, British Columbia’s government has enacted restrictions on autopilot use within the province.

Related: Electric vehicle claims keep rising in Canada

In comments during the Florida trial, the vehicle’s driver said he’d trusted the technology, which raises questions about user complacency with new tech. Mitchell notes users of all types of technology have become accustomed to simply clicking ‘yes’ when a screen display lists pages of terms and conditions – without reading or absorbing any of the warnings.

“You read the thing…on your car dash [and then] you click, ‘I agree.’ It’s going to practically lull people into a comfort of less paying attention,” says Mitchell. “And I don’t know if there’s a way around that.”

What’s more, he says the possibility of bringing a manufacturer into the liability equation could turn the insurance world (from carriers to brokers to claims adjusters) upside down.

“Previously, there was no path to drag in manufacturers for fault. The fault determination rules that would normally decide on your accident would be there, but we [now] need to include, ‘Was the human driving or not?’” he tells CU. 

Related: How auto insurance will navigate a world with self-driving cars

In many ways, if civil trial juries in multiple U.S. states mimic the Florida verdict, it could set up a dynamic whereby insurers will be regularly judging and untangling fault. And eventually there will have to be regulations around the sharing of data from cars that use autopilot systems with the P&C insurance industry.

“If you manufactured the car, and I’m the insurance company defending the driver, we need to be able to compare notes to quickly adjudicate a claim,” says Mitchell. “We can’t take everything to a six-year resolution in the courts. We’re going to need some good governance for deciding on the claim and paying quicker.”

He adds a defense lawyer won’t hesitate to say that a driver using some form of autopilot system is at fault because they weren’t paying attention.

“That accusation needs to be proven, and that means they need to have access to that [data]. And how the heck are we going to do that?” Mitchell asks.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.