How Self-Driving Technology is Reshaping Insurance and Transportation Risk
As sci-fi novelist William Gibson observed, “The future is already here—it’s just not very evenly distributed.” When people think of autonomous vehicles (“AVs”), they usually picture driverless cars. While not incorrect, that perception far underrepresents the realm of AVs traversing the streets today. Regulators have established a structured AV classification scheme, and as each level progresses, the more prevalent—and muddier—the questions of risk assessment and liability become.
The Basics of Autonomous Vehicles
The Society of Automotive Engineers (SAE) developed a six-tier classification system, Levels 0 through 5, that describes the degree of automation in a vehicle.
Level 0 (No Driver Automation)
The human driver controls all functions. Any alerts or warnings are informational only.
Level 1 (Driver Assistance)
The vehicle can assist with either steering or acceleration/braking, but not both simultaneously (e.g., cruise control or lane-centering features). The driver remains fully responsible and must be prepared to take control at any moment.
Level 2 (Partial Driving Automation)
The vehicle can operate steering and acceleration/braking simultaneously under specific conditions, but the human must remain engaged and ready to intervene. Examples of this Level are Tesla’s Autopilot and General Motors’ Super Cruise. SAE Level 2 is where transportation defense attorneys find the bulk of current litigation. Some manufacturers use a Level 2+ designation for systems with greater automation than Level 2, but the driver must continuously supervise.
Level 3 (Conditional Driving Automation)
The vehicle can manage all driving in certain conditions and will alert the human to take over when needed. Unlike Level 2, the driver need not monitor continuously and must respond only when prompted. This Level creates a profound gap in the liability analysis as questions of responsibility during the window between when the vehicle issues a takeover request and when the human takes control arise. Honda’s Legend sedan, certified for SAE Level 3 operation in Japan, is testing these waters.
Level 4 (High Driving Automation)
The vehicle can complete a trip without human intervention within a defined operational design domain (a specific geographic area, weather condition, or speed range). If the vehicle reaches the edge of its operational envelope, it will come to a safe stop rather than demanding human intervention. Waymo’s service operates at SAE Level 4.
Level 5 (Full Driving Automation)
The vehicle can operate in any condition, on any road, that a human driver could navigate. No steering wheel is required, and no human occupant is needed. Level 5 remains largely theoretical as no commercially deployed system has yet achieved it.
From Today’s Data to Tomorrow’s Risk: Autonomous Vehicles and Liability
The insurance and transportation industries are watching AVs with a keen eye, and the data is telling a complicated story. Waymo, which markets itself as the world’s first autonomous ride-hailing service, commissioned a study in December 2024. The study, conducted by Swiss Re, a leading reinsurer, analyzed liability claims related to collisions based on 25.3 million fully autonomous miles driven by Waymo. The study found that the “Waymo Driver” exhibited better safety performance when compared to human-driven vehicles, with an 88% reduction in property damage claims and a 92% reduction in bodily injury claims. This optimism must be tempered, as Verisk’s ClaimSearch Trends Report for 2025 demonstrated that the number of claims involving AVs quadrupled from around 100 claims in 2021 to over 400 claims in 2025. While this increase is potentially explained by the rollout of fleets from companies like Waymo, Cruise, Zoox, and Tesla, it must be noted.
In June 2025, Goldman Sachs predicted that AV adoption could cut auto insurance costs by more than 50% over the next 15 years, estimating a $7 billion AV rideshare market and a $5 billion market for autonomously driven trucks by 2030. Similarly, S&P Global Mobility forecasts that by 2035, U.S. roads will be traveled by nearly 87 million Level 2 vehicles, 45 million Level 2+ vehicles, and 3.5 million Level 3 vehicles. These numbers are staggering; how the expansion of Level 2 and 3 vehicles will reshape the litigation landscape remains to be seen.
The Impact of Autonomous Vehicles on Claims and Litigation
The cornerstone of traditional motor vehicle negligence law is the human driver. That framework buckles under the weight of autonomous technology. When an AV allegedly causes an accident, the potential liability is not constrained to the driver’s assets, an employer’s assets, or a personal or even commercial auto policy. That exposure now potentially extends to the AV manufacturer. For example, in a Level 2 AV loss, juries may be asked not only whether the human driver was negligent, but also whether the driver reasonably relied on the system, whether the system performed within its design parameters, and whether the manufacturer adequately warned the driver of the system’s limitations.
The discovery landscape is likewise affected by AVs. AVs generate volumes of telemetry, and disputes over discoverability are all but guaranteed. Expert retention will also evolve. While accident reconstruction, biomechanical, and human factors experts are the norm, expect AV litigation to demand retention of software engineers and autonomous systems experts. Challenges to the methodology and qualifications of these experts will likely follow.
Notable Autonomous Vehicles Verdicts
While it is premature to identify “trends,” juries in California and Florida have begun to shape the verdict landscape in AV-related accidents.
- Justine Hsu v. Tesla Inc., tried before a Los Angeles Superior Court jury, posed the question of Tesla’s liability where the Autopilot system of Hsu’s Model S swerved into a curb, allegedly causing her injury. The jury returned a complete defense verdict, concluding that Tesla’s warnings about Autopilot’s limitations were clear and that driver distraction was to blame.
- Molander v. Tesla Inc., also tried before a Los Angeles Superior Court jury, resulted in a $0 verdict. Plaintiffs sought $400 million in damages, arguing that a manufacturing defect caused the vehicle to swerve. The jury found no manufacturing defect.
- The 2025 watershed case of Benavides v. Tesla in Miami altered the defense-friendly landscape—at least for now—when a federal jury found Tesla 33% liable for a fatal 2019 accident and awarded $243 million in damages, including $200 million in punitive damages. The jury found Tesla failed to adequately warn drivers of Autopilot’s limitations. Tesla’s appeal is pending. For now, the Benavides verdict shows that jurors may be prepared to assess liability for perceived gaps between what a company markets its product to do and what it actually does.
Navigating the Road Ahead: Key Takeaways for Insurers and Operators
Autonomous vehicles are reshaping the fundamentals of motor vehicle litigation, from who can be sued to the scope of discovery. As Level 2 and Level 3 AVs multiply, insurers and trucking, transportation, and rideshare companies must evolve in step, recalibrating everything from risk assessment to marketing to expert retention. The early verdicts out of California and Florida suggest no single playbook has emerged. What is certain is that the unevenly distributed future William Gibson once described is making itself at home in the transportation industry, and practitioners must keep their hands on the pulse of autonomous vehicle technology and their eyes on the road ahead.
Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between Galloway and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions.
