Driverless car allowances

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Driverless (also referred to as "self-driving" or "autonomous") car allowances are policies that allow for the lawful use of motor vehicles that do not require a human operator. As driverless technologies are just beginning to emerge on the consumer market, most driverless car allowances are enacted to enable driverless car operation for research and testing purposes. [1] These policies typically create a special set of requirements that restrict operations, require additional documentation, and clarify liability and insurance requirements. [2] Due to the early stage of policy implementation, little work has been done to investigate policy outcomes.



Conceptual Example

A state desires to encourage technological and economic investments in driverless car technologies. At the same time, the state seeks to limit the risks such operations pose to other motorists, pedestrians, and private property. To accomplish this goal, the state adopts policies allowing businesses engaged in the development and production of autonomous vehicle technologies to operate driverless vehicles on state roadways as part of their research and testing efforts. In order to monitor progress and ensure safety, operators are required to register their vehicles and report any incidents to a publicly-accessible database administered by the state. Additionally, operators are required to meet a set of technical safety requirements, documentation standards, and insurance requirements. Driverless cars eventually result in increased safety because they are not subject to human error and misjudgment.

Specific Example

Beginning in 2012, the State of California adopted legislation to add a new section (38750) to the California Vehicle Code (CVC). [3] This legislation defined autonomous technology as "technology that has the capability to drive a vehicle without the active physical control or monitoring by a human operator," which excluded lower degrees of automation for technologies such as adaptive cruise control, and established regulatory authority within the State Department of Motor Vehicles (DMV). [3] On September 16, 2014, regulations governing the testing of autonomous vehicles went into effect, and on December 16, 2015, an initial draft of regulations for the public operation of autonomous vehicles was released for review, followed by a revised draft of regulations that was released in September 2016. [3] Among other requirements, the draft revised regulations require manufacturers of autonomous vehicles to meet various testing, permitting and licensing standards; to be in compliance with federal standards; and to secure local legislation that authorizes their operation. As one of the first states to propose regulations that would allow autonomous vehicles to would operate without a driver, California has positioned itself as a leading jurisdiction for testing and development of autonomous vehicle technology--along with the potential resultant socio-economic benefits--with 15 companies having received permits to test autonomous vehicles with drivers as of September 30, 2016. [4]



Tradeoffs of implementing this policy may include:

  1. Increased congestion due to decreased cost of driving. [2]
  2. Placing other motorists, pedestrians, and private property at risk from systems failures. [5]
  3. Reduced employment in certain economic sectors, such as transportation and auto repair. [2]
  4. Reduced privacy with respect to drivers' travel histories. [5]
  5. Reduced use of public transit due to decreased cost of driving. [2]
Compatibility Assessment

Compatibility Assessment.png

If answered yes, the following questions indicate superior conditions under which the policy is more likely to be appropriate:

  1. Are the necessary government agencies and infrastructure in place to provide adequate regulation?
  2. Do the relevant government agencies possess, or can they easily access, the technical expertise necessary to design and maintain appropriate regulations?
  3. Would demand exist within the driverless car industry to operate the vehicles within the jurisdiction?
  4. Is technology within the driverless car industry sufficiently developed so as to allow for the meaningful and safe operation of the vehicles?
  5. Is enabling economic growth in the driverless car industry worth the risks associated with becoming a testing ground for relatively newer, less proven technologies?


The following questions should be considered when determining how to implement this policy:

  1. How will "driverless" be defined?
    1. E.g., as of May 2013, the U.S. Department of Transportation (DOT) defined five different levels of vehicle automation: [1]
      1. No-Automation (Level 0): The driver is in complete and sole control of the primary vehicle controls at all times.
      2. Function-specific Automation (Level 1): Automation at this level involves one or more specific control functions (e.g., electronic stability control or pre-charged brakes).
      3. Combined Function Automation (Level 2): Automation of at least two primary control functions designed to work in unison to relieve the driver of control of those functions. (e.g., adaptive cruise control in combination with lane centering).
      4. Limited Self-Driving Automation (Level 3): Automation in which the driver may cede full control of all safety-critical functions under certain traffic or environmental conditions. The driver is expected to be available for occasional control.
      5. Full Self-Driving Automation (Level 4): The vehicle is designed to perform all safety-critical driving functions and monitor roadway conditions for an entire trip (occupied or unoccupied). Assumes driver will provide destination or navigation input, but is not expected to be available for control at any time during the trip.
  2. Is there sufficient demand in our area to justify the cost of regulation?[1]
    1. Depending on the regulatory design of the policy to allow such cars, the cost of adopting and maintaining such a policy may outweigh its benefits.
    2. As of May 2013, the U.S. recommended that fully autonomous driverless cars only be allowed for testing, and not commercial, purposes. [1]
  3. What restrictions or specifications are needed to ensure safety?
    1. Operational restrictions would include limiting the use of such vehicles to specific roads, hours of service and speeds of operation.
    2. Technical requirements or specification might mandate the use of only allowable models of driverless cars, real-time monitoring of their use, adequate cybersecurity protections, the capacity to self-identify vehicle malfunctions, and the ability to operate without disabling any otherwise mandatory automobile safety systems.
    3. Testing requirements may include adequate performance over a minimum number of miles driven on private roads prior to public road use, the presence of an operator who has completed a self-driving car safety program, regular inspection and permitting and the submission of a testing plan.
  4. What reporting requirements are necessary?
    1. To expand available data and support research concerning self-driving vehicles, the U.S. DOT recommends requiring businesses testing self-driving vehicles to submit information on: instances in which a self-driving vehicle, while operating in or transitioning out of self-driving mode, is involved in a crash or near crash; and incidents in which the driver of one of their self-driving vehicles is prompted by the vehicle to take control because of a failure of the automated system or the inability of the automated system.[1]
  5. What insurance requirements are appropriate?
    1. In general, the advent of driverless cars is anticipated to result in a shift in liability from driver to manufacturer, implying a similar shift in insurance coverage needs and requirements.
    2. On the whole, the incidence of accidents and resultant cost of insurance is likely to fall, with data already showing a reduction in property damage liability and collision claims for cars equipped with forward-collision warning systems, especially those with automatic braking. [6]
  6. Which government agencies should be involved in implementation, monitoring, and enforcement?
    1. In the U.S., the federal Department of Transportation sets high-level roadway and vehicle safety testing and standards, while state departments of transportation license operators and register vehicles.
  7. What are appropriate penalties for companies or individuals that are non-compliant?
    1. Examples of appropriate penalties may include civil or criminal penalties and litigation (e.g., attorney general-initiated legal action).
  8. What enforcement mechanisms should be implemented?
    1. Examples of enforcement mechanisms may include monitoring of driverless car data by a department of transportation, legal action initiated by a department of consumer affairs or attorney general, or other law enforcement actions.
    2. Examples of appropriate penalties may include civil or criminal penalties and litigation (e.g., attorney general-initiated legal action).












  • Ethical Decision Making During Automated Vehicle Crashes. Goodall, Noah. (2012). Journal of the Transportation Research Board, Vol. 2424. doi: 10.3141/2424-07. This paper proposes a method for creating algorithms that handle automated ethical decisions with regard to driverless cars.


  1. 1.0 1.1 1.2 1.3 1.4 1.5 U.S. Department of Transportation Releases Policy on Automated Vehicle Development. U.S. Department of Transportation, National Highway Traffic Safety Administration (NHTSA). May 30, 2013.
  2. 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Autonomous Vehicle Technology: A Guide for Policymakers Anderson, James M., Nidhi Kalra, Karlyn D. Stanley, Paul Sorensen, Constantine Samaras and Oluwatobi A. Oluwatola. Santa Monica, CA: RAND Corporation, 2014.
  3. 3.0 3.1 3.2 Invitation to Pre-Notice Public Discussions on Proposed Regulations: Autonomous Vehicles State of California Department of Motor Vehicles, 2016.
  4. "California proposes giving more freedom to test self-driving cars", Sage, Alexandria. Friday, September 30, 2016.
  5. 5.0 5.1 Autonomous Vehicle Implementation Predictions: Implications for Transport Planning. Litman, Todd. Victoria Transport Policy Institute. December 10, 2015.
  6. Self-Driving Cars and Insurance. Insurance Information Institute, February 2015.
  7. Search Results for "Autonomous vehicles" in 2015 State of Florida Statutes. Official Internet Site of the Florida State Legislature. Last accessed on March 6, 2016.
  8. Council of the District of Columbia Legislation Item B19-0931, Autonomous Vehicle Act of 2012. Council of the District of Columbia. Last accessed on March 6, 2016.
  9. State of California, Express Terms, Title 13, Division 1, Chapter 1, Article 3.7 - Autonomous Vehicles. Department of Motor Vehicles, State of California. Last accessed on March 6, 2016.
  10. Nevada Revised Statutes Chapter 482A - Autonomous Vehicles. Legislature of the State of Nevada. Last accessed on March 6, 2016.
  11. 11.0 11.1 11.2 Ten Ways Autonomous Driving Could Redefine the Automotive World. Bertoncello, Michele and Dominik Wee. McKinsey & Company, June 2015.
  12. 12.0 12.1 Among the States, Self-Driving Cars Have Ignited a Gold Rush. Grandoni, Dino. The New York Times. August 6, 2015.
  13. Self-Driving Cars Could Spell the End of the Taxi Industry. Is That a Good Thing?. Wang, Amy X. Future Tense, Slate. July 7, 2015.
  14. The World’s First Self-Driving Semi-Truck Hits the Road. Davies, Alex. Gear, Wired. May 5, 2015.
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