Autonomous vehicle insurance
7 minute read Published on Oct 19, 2025 by BrokerLink Communications
Autonomous vehicles (AVs) are no longer a futuristic concept shown in movies and video games; they're becoming an actual reality on Canadian public roads. With over 50 pilot programs across provinces like British Columbia, Ontario, and Quebec, Canada is joining countries worldwide in investing in self-driving technology.
As autonomous vehicles become increasingly prevalent in the future, the car insurance industry will face significant challenges. Some of the most pressing roadblocks the auto insurance industry faces with the shift from human drivers to artificial intelligence include reevaluation of risk assessments, legal liability, and coverage frameworks. Moving forward, insurance companies and regulatory bodies must adapt to uphold the safety of travellers in this new age of transportation, and that starts with autonomous vehicle insurance.
What is autonomous vehicle insurance?
Autonomous vehicle insurance is a special type of coverage specifically designed to address the unique risks associated with self-driving vehicles. Unlike traditional auto insurance, which provides coverage for human errors, AV auto insurance will need to extend coverage to possible software glitches, technological failures, and cybersecurity threats. Realistically, the key components of these types of insurance products will include:
1. Product liability
Product liability will provide coverage for any defects or malfunctions in the self-driving vehicles, hardware or software updates that may lead to car accidents.
2. Cybersecurity coverage
This portion of autonomous vehicle insurance will protect against potential hacking of a vehicle's technological systems.
3. Data privacy
Will safeguard a vehicle owner's data that is collected and transmitted from their autonomous vehicles to ensure compliance with Canadian data privacy regulations.
A report issued by the Insurance Bureau of Canada in 2018 states that a single auto insurance policy that encompasses both human driver error and technological malfunctions may be the best option to ensure those involved in car accidents are swiftly and fairly compensated for their losses and property damage.
How auto insurance for self-driving cars differs from traditional coverage
Car insurance for fully autonomous vehicles will differ substantially from traditional cars and how they are regulated in the current insurance landscape in several ways. Here's a closer look:
1. Risk assessment
Traditional auto insurers consider several factors to determine a customer's risk level, including age, driving records, location, vehicle type, insurance history, and more--all of which influence a customer's insurance premiums. With self-driving cars, insurance companies will have to assess the vehicle's self-driving technology. This may include how self-driving features perform, software integrity, and the overall reliability of the car itself.
2. Legal liability
In a traditional car accident, the fault is usually assigned to the human driver. However, with autonomous vehicles, legal liability may fall on the manufacturers, software developers, or hardware suppliers.
For example, if an autonomous vehicle misreads a traffic light due to a coding error, the fault might lie with the software provider, not the passenger.
3. Policy design
When considering regulatory frameworks for traditional auto insurance, coverage is categorized into liability, accident benefits, collision, comprehensive, and other policies intended to protect the policyholder should they cause an accident, or be involved in one due to the actions of another motorist. With self-driving vehicles, auto insurance policies may include:
Product liability covers malfunctioning technology.
Cyber liability for hacking or data breaches.
Data protection for consumers.
4. Claims process
Undoubtedly, the insurance claims process for self-driving cars will be more complex than conventional processes. Insurance adjusters will need to access data logs, sensor data, and algorithms to determine who is at fault, which can take more time and resources.
5. New risk factors
Car insurance as we know it today doesn't account for software failures or remote hacking. Therefore, insurance for autonomous vehicles will need to include provisions for these new risks.
Canadian regulatory frameworks for autonomous vehicles & insurance industry implications
How Canada is approaching the development of autonomous vehicles is still evolving, given that self-driving cars aren't as readily available in Canada, unlike the United States and other countries.
Regardless, with provinces like Ontario investing in new vehicles with full automation as of 2016, Transport Canada released official Guidelines for Testing Automated Driving Systems in 2021, which includes regulatory responsibilities of federal, provincial, and municipal governments, and a checklist organizations should take to obtain approvals for testing of automated driving systems in Canada. Fast forward to today, Ontario and Quebec remain the two most active provinces in autonomous vehicle testing, encompassing Level 3 and Level 4 automation trials.
Furthermore, as insurance is regulated on a provincial level, there is currently a lack of unified frameworks across the country, which creates challenges for the industry. However, with ongoing reviews by Transport Canada and provincial authorities and governments in the works, we may see more harmonized insurance regulations as autonomous vehicles become more common on Canadian roads to ensure improved safety.
Liability: Who’s at fault in an AV car accident?
Determining liability in an autonomous vehicle accident is one of the most complex legal questions surrounding the future of autonomous vehicle insurance. Today, liability is based on human intervention. But with autonomous vehicles, where there is a full autonomous mode or partial automation options, the lines are blurred.
A possible scenario for autonomous vehicles, where the "driver" is actually software, is shared liability. For example, let's look at a partially autonomous vehicle (level 3) where a driver can still intervene. Should the vehicle fail to recognize a pedestrian walking at a marked crosswalk, but the driver can and doesn't take control of the car, it's possible that both the driver and manufacturer could share fault.
In higher levels of automation (Level 4 or 5), where there may be no steering wheel or driver at all, fault could be shifted to the automakers, software developers, or parts manufacturers who've created the "product," similar to how business insurance is handled.
In Ontario, businesses participating in autonomous vehicle trials are required to have a minimum of $5 million in liability coverage or $8 million in coverage if there are more than eight passengers in the vehicle. Ultimately, there's still no clear legal standard outlining who pays when an autonomous vehicle is involved in a collision. What is clear, however, is that the manufacturers and consumers will share liability.
Challenges insurers face with autonomous technology
Insuring autonomous vehicles come with a unique set of challenges that traditional models were not designed to handle, including:
A Lack of data
A pressing issue faced is the lack of historical data. Claims histories, driver behaviours, and statistical models play a crucial role in how insurance is priced for customers. However, because autonomous vehicles are new, there's a lack of historical data to review. As a result, it's going to be difficult for insurance providers to predict things like accident frequencies, auto thefts, or repair costs.
Rapid development of technology
Another problem is how quickly technology is developing. Advanced driver assistance systems like sensors, cameras, and artificial intelligence algorithms are evolving rapidly. Because of this, insurers need to continuously reassess their risk models to keep up with these updates.
Cybersecurity
Cybersecurity is also a concern. Because advanced driver assistance systems will be connected to the internet, hackers could gain control of a vehicle or leak sensitive data.
How your premiums may change
A common question many Canadian drivers, including consumers wishing to invest in autonomous vehicles in the future, have is how insurance costs are going to change:
Fewer accidents = lower liability costs
According to the Insurance Bureau of Canada, human error is responsible for 94% of collisions. In theory, autonomous vehicles are meant to improve the future of transportation safety, which could mean fewer accidents. Therefore, it's safe to say that with fewer liability claims and injuries, insurers may reduce premiums related to third-party liability and accident benefit payouts. This could reduce overall insurance rates over a long period of time.
More expensive repairs for high-tech parts
Despite improvements in safety, autonomous vehicles will be developed with expensive technology. With autonomous vehicles being equipped with numerous sensors, cameras, and computing systems, it's expected that repair and replacement costs will skyrocket.
For example, even a minor fender bender could lead to thousands of dollars in repairs, which could increase collision coverage and comprehensive coverage premiums.
Automation level could influence pricing
There's also a possibility that insurance companies price premiums based on the level of automation your vehicle has. For example, a level 2 autonomous vehicle, which requires driver supervision, may be priced similarly to traditional cars. In contrast, a level 4 or level 5 autonomous vehicle may have more expensive rates, given their ability to operate on their own.
Real-time data and dynamic pricing
Given that autonomous vehicles will generate significant amounts of user data, insurance companies may offer dynamic pricing models similar to usage-based insurance. For example, if the autonomous vehicle performs safely with fewer intervention alerts, discounts may be available. In contrast, system glitches and other malfunctions could lead to higher premiums.
Case study: Tesla insurance and other market leaders
One of the more prominent leaders in the autonomous vehicle industry by far is Tesla. Tesla has a unique insurance system known as "Tesla's Safety Score," which uses real-time driving data to assess driver behaviour. This system assesses variables like hard braking, aggressive turning, risky following, excessive speeding, nighttime driving, Autopilot disconnects, and unbuckled driving. Drivers with higher Safety Scores may see cheaper monthly insurance premiums, as prices change continuously according to their driving habits.
While Tesla hasn't publicly announced plans to expand its insurance program into Canada, integrating car data into insurance pricing could set the tone for how autonomous vehicle premiums are priced in the future. Guide to other opportunities in the market:
Other market players
Telematics are also integrated into General Motors' OnStar Insurance and Ford's Insure programs to allow for more usage-based pricing structures. In the coming years, developments into further customized insurance premiums using telematics technology can be expected.
Insure your vehicles with BrokerLink
The usage of autonomous vehicles in Canada presents a unique opportunity for future mobility and insurance companies alike, although challenges remain present. Nonetheless, our Canadian customers can rest assured knowing BrokerLink will remain at the forefront, ensuring you find affordable coverage for your new vehicles. With access to numerous types of auto insurance policies from some of Canada's top insurers, our experienced brokers are available to help you purchase:
We're also available to answer any questions or concerns you may have, like whether or not self-driving cars are safe, whether insurance covers repairs from single-car accidents, what type of insurance you need, and more!
To work with BrokerLink, give us a call or contact us via email to speak with a broker directly. You can also get a free car insurance quote using our online quote tool at any time!
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