Canada: Towards Automated Automobiles: Shifting Liability Exposure In The Insurance Industry

Last Updated: November 25 2015
Article by David A. Nicol and Cynthia Aoki


Imagine a world where there are no drivers, only passengers riding in self-driving vehicles. Although this world has not yet arrived, current trends and technological advancements have allowed for more automated features in vehicles.

How can the insurance industry adequately adapt to these changes and developments?

Since the 1970s, the number of injuries resulting from automobile collisions has fallen by over 30% and the number of fatalities has fallen by 40%. The reason for this decline is that safety features that only existed in luxury vehicles 20 years ago, like anti-lock brakes and traction control, are now available as standard features on most vehicles. Airbags became widespread in the early 1990s, and have advanced from driver-side airbags to passenger, rear, and side deployment airbags.

Despite these decreases in injuries, the amount of money spent by Canadians on insurance premiums has been increasing over the past 40 years. This inverse relationship is due to the significant increases in the amount of damages awarded in automobile collision claims.

Towards a More Automated Automobile

Future developments, allowing for more automation in safety features, will likely continue to reduce the number of accidents each year. Presently, only a small number of luxury vehicles include features such as forward-collision avoidance, lane departure warnings, "autopilot" systems, automated parking, and adaptive cruise control. However, in the next five to ten years, these automated features will likely become widespread and standard in most vehicles.

According to the Insurance Institute for Highway Safety ("IIHS"), more than 20% of 2014 models now offer a front crash prevention system with automatic-braking capabilities. More importantly, the IIHS has found that if all passenger vehicles were equipped with forward collision and lane departure warning features, blind spot detection, and adaptive headlights, one in three fatalities and one in five injuries could be prevented or mitigated.

Potential Decrease in Rear-End Collisions

The automated forward-collision-avoidance system uses elaborate cameras or radars, which can measure the speed of the vehicle in front of it and determine whether there is a risk of a collision. Some systems will only alert the driver of the danger, but other systems, such as Automatic Emergency Braking ("AEB"), will automatically apply the brakes in emergency situations.

Given that one in four automobile accidents are rear-end collisions, the adoption of forward-collision avoidance systems and AEBs could help to significantly decrease these types of accidents.

On September 11, 2015, the National Highway Traffic Safety Administration and the IIHS announced that 10 major vehicle manufacturers, representing 57% of light duty vehicle sales in 2014, have committed to making AEBs a standard feature on all new vehicles. The widespread introduction of this feature will have a massive effect on the number of accidents and injuries from automobile collisions.

The adoption of these automated features will impact the insurance industry and the personal injury bar in the years to come. As such, insurers and lawyers will need to creatively respond to these changes in order to stay competitive.

Shifting Liabilities

As long as there is still a driver in the vehicle, that driver will likely remain liable for an at-fault collision, even in the event that automated safety features fail. However, with an element of automation in the operation of the vehicle, there is now the potential for manufacturers to incur liability.

Product liability will extend to manufacturers, design engineers, and retailers who make defective products available to the public. These parties can be held liable for injuries caused by those products. In introducing new safety features, automobile manufacturers have extended their duty of care and have potentially exposed themselves to liability when these systems fail.

Similar to a situation where a braking system fails or an airbag does not deploy, automobile manufacturers will face liability exposure when an automated avoidance system fails to react in time to prevent a collision. The driver who is sued after such an at-fault accident may have the ability to bring a Third Party Claim against the manufacturer of their vehicle. Alternatively, an injured party faced with an underinsured defendant, may choose to add the vehicle manufacturer as a co-defendant for an allegedly defective automated avoidance system.

There have not yet been any cases before the Canadian or American courts addressing the shifting of liability with respect to automated automobiles.

However, as we move forward, the Courts will likely grapple with the following questions:

  • How much will an at-fault driver be expected to rely on these automated safety features?
  • Will there be new expectations in terms of distracted driving?
  • How will these automated safety features fare in Canadian weather?
  • Who will bear the liability in cases of unavoidable accidents?

What Changes are Ahead for Insurers?

In the face of dramatically lower accident rates and increased competition for shrinking premiums, insurers will need to be aware of the impact these automated safety features have on a driver's risk profile.

Some insurers now offer discounts on their premiums to individuals who own vehicles containing features such as passive immobilizers, which help to reduce theft claims. 

Similarly, insurers with clients who own vehicles with automated safety features will likely see a decrease in pay-outs for injury claims. As such, insurers will want to act quickly and creatively to capture market shares of these individuals. This will allow insurers to further reduce insurance rates and attract clients in a competitive marketplace.

Fully Automated Cars

In the background of all these automated safety features is the inevitable introduction of fully autonomous cars.

Google has been working on its self-driving car project since 2009 with the intention of releasing its car to the public in 2020. In September 2015, Google unveiled an automatic self-driving vehicle with no steering or braking systems. Instead, passengers simply entered the vehicle, input a destination, and the Google car was able to drive itself.

To compete with Google, Apple has tripled the number of engineers working on its self-driving car project. Reports indicate that Apple is aggressively planning a targeted "ship date" of 2019 to release their fully automated vehicles.


On October 13, 2015, the Ontario government announced that they will be launching a pilot project to allow the testing of automated vehicles on its roads.

Realistically, it will likely be a couple of decades before fully autonomous vehicles constitute the majority of vehicles on Canadian roads. However, we have already begun, and will continue, to see some of the legal effects of partially automated vehicles.

Both the insurance industry and the personal injury bar will need to be cognizant of these trends and will need to prepare for a future of increased competition and leaner budgets. A dramatic reduction in accidents will likely force counsel to be creative in finding ways to shift liability towards the manufacturers of these automated vehicles.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

David A. Nicol
Cynthia Aoki
Events from this Firm
27 Oct 2016, Seminar, Edmonton, Canada

Alberta is going through a difficult economic period. These times can be challenging and while owners struggle to get their business through the rough patch, they want to preserve the assets and capital they have built up.

2 Nov 2016, Webinar, Calgary, Canada

“Problem Employees” come in a variety of forms but seem to take up the majority of an employer’s time. Each form brings its own challenges and each must be addressed in a different way.

30 Nov 2016, Webinar, Calgary, Canada

Legal issues surrounding contaminated sites affects landowners, developers, realtors, as well as consultants and contractors working on the front lines. This webinar will provide a practical review of how the legislation is actually being used, recent court decisions, challenges with brownfield developments, and future changes.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.