Automated and Electric Vehicles Act 2018 becomes law

Posted: 24/07/2018

The Automated and Electric Vehicles Act 2018 received Royal Assent on 19 July. Its commencement date is subject to appointment by the Department for Business, Energy and Industrial Strategy (BEIS); please check the Government website for updates on implementation (including any secondary legislation) if you are considering issues to which this law is relevant.

This legislation is part of the Government’s industrial strategy to promote the development and deployment of both automated and electric vehicles and is in line with policies on climate change. Note that an automated vehicle (AV) does not have to be electrically powered and an electrically powered vehicle does not have to be an AV.

The purpose of this legislation is both to amend the existing compulsory third party insurance framework by extending it to cover the use of automated vehicles and deal with electric and hydrogen powered vehicle charging infrastructure.

This article considers only those elements of the Bill dealing with insurance and liability for accidents caused by automated vehicles. The provisions of the Bill which deal with electric vehicle charging infrastructure are the subject of a separate article for the sake of convenience.

Currently the law relating to motor insurance is focused on the idea that human drivers must have personal insurance to cover compensation to third parties for personal injuries and / or property damage caused by them when they are driving. This legislation introduces the notion that an insurer or owner can be liable for the consequences of an accident caused by the actions of an AV at a time when it is not under the immediate physical control of a human being, thus aligning owners’ and insurers’ liability in both types of driving situation.

It also provides that the route to compensation following an accident for those who have suffered damage will be through the motor insurance settlement framework, rather than through the product liability framework, although this potentially still leaves room for a dispute between an owner or insurer who has been made primarily liable for the consequences of an accident, and a manufacturer, separately from any compensation issue.

Broadly, the Bill provides as follows:

• for registration by the Department of Transport of vehicles designed or adapted to be capable of ‘driving themselves’ for use in public places. The Bill uses the term ‘automated vehicles’ (AVs) rather than driverless cars. A vehicle is ‘driving itself’ if it is operating in a mode in which it is not being controlled and does not need to be monitored by an individual. Regulations will be drawn up by the Department of Transport to provide for this;
• where an accident is wholly or partly caused by an AV ‘when driving itself’ and is insured at the time of the accident, insurers will be liable for loss and damage;
• where an accident is wholly or partly caused by an AV which is driving itself at the time but is not insured, the registered owner is liable for the loss and damage;
• there are provisions relating to contributory negligence, the most important of which is that neither an insurer nor owner will be liable to the person in charge of the vehicle for damage suffered by him or her if the accident was caused by the AV in circumstances where the person in charge of the vehicle used it in automated mode ‘where it was not appropriate to do so’;
• ‘damage’ in this context can include death, personal injuries or damage to property, subject to certain specific limitations. This provision cannot be excluded by the terms of insurance policies;
• liability may be limited, however, where the accident is caused by modifications to software made by the injured party, or with his knowledge, that are prohibited under the insurance policy, or failure by the injured party to install safety critical software. Software is ‘safety critical’ if it would be unsafe to use the vehicle without the updates being installed. 

This legislation will be subject to a report to Parliament after two years in operation.

Note

• The legislation enables insurers to offer insurance to the owners of AVs for driverless activities;
• It applies only to AVs that can lawfully be used on the public roads or other public places. The insurance regime does not extend to vehicles which can in certain circumstances operate independently, but which are not permitted to be used in this way on public roads. This would exclude, for example certain agricultural vehicles which can run automatically up and down a private field but cannot as the law stands be lawfully used as an AV on the road. Vehicles in this class still fall under the insurance regime contained in the Road Traffic Act 1988.
• Public roads for the purpose of this legislation are as defined in the Road Traffic Act 1988.

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