Autonomous and connected vehicles (AVs/CVs) are no longer the stuff of science fiction — they’re an evolving reality transforming the way we move, manufacture, and insure. For India — with its dense urban roads, fragmented infrastructure, and rapidly digitizing insurance ecosystem — the arrival of self-driving and connected mobility will fundamentally reshape how motor insurance operates.

Who is liable when a car drives itself? How will insurers price machine-led risk? And what new insurance products will protect owners, manufacturers, and even the algorithms that steer us? This article explores what the future holds for Indian motor cover in the age of autonomy.

1. The Present: India’s Early Steps into Connected Mobility

Indian insurers are experimenting with telematics, driver behavior scoring, and usage-based insurance (UBI) pilots. While the Insurance Regulatory and Development Authority of India (IRDAI) has modernized standard motor rules — particularly around digital KYC and policy issuance — there’s still no clear regulatory framework for autonomous vehicle insurance.

This regulatory vacuum allows innovation, but it also raises uncertainty: who pays when an AI system fails? As India’s automotive ecosystem evolves, insurers, regulators, and original equipment manufacturers (OEMs) will need to jointly craft solutions.

2. Liability Shifts: From Driver to Designer

In today’s legal system, liability rests with the driver. But when cars begin to make decisions independently, the liability shifts toward those who designed, built, or coded them.

At lower levels of automation (Level 2–3), the driver must still supervise — so negligence may still apply. But once vehicles reach Levels 4–5, the onus of responsibility will transfer toward:

• Manufacturers and software developers (for product or algorithmic failure)

• Fleet operators or mobility providers (for maintenance or operational errors)

• Insurers and reinsurers (as first payers, later recovering from OEMs)

This shift means motor insurance will increasingly intertwine with product liability, cybersecurity, and software assurance — blurring traditional boundaries.

3. Rewriting Risk: Data, Sensors, and Behavior Analytics

Gone are the days of underwriting based purely on driver profiles and vehicle make. Future insurance models will rely on data-rich telematics and sensor-driven analytics.

Key data sources will include:

• Lane-departure, collision-avoidance, and ADAS event logs

• OTA (over-the-air) software update histories

• Environmental and map-based operational domains (ODD)

• Frequency of manual overrides and safe-distance adherence

Such granular data allows insurers to develop personalized and dynamic pricing models, ensuring fairer premiums based on real-world driving and software reliability — not just static assumptions.

4. Emerging Insurance Products for the Autonomous Era

India’s insurance sector will witness a wave of innovative products catering to autonomous and connected vehicles. Expect:

1. Autonomous Liability Wraps — add-on covers for software bugs, perception failures, and sensor malfunctions.

2. Cyber and Data Protection Policies — safeguarding against hacking, data theft, and ransomware targeting vehicle systems.

3. Fleet and Mobility Operator Covers — integrated policies blending motor, liability, and passenger protection for shared autonomous fleets.

4. Parametric Micro-Covers — instant payouts for specific technical failures like sensor malfunctions or connectivity loss.

5. Embedded OEM Insurance — coverage offered directly at vehicle purchase, jointly underwritten by the manufacturer and insurer.

These modular policies will become the new standard as India transitions toward connected mobility ecosystems.

5. Claims and Evidence: When Data Becomes the Driver

In autonomous vehicle incidents, data is the new witness. Event Data Recorders (EDRs), camera feeds, LiDAR maps, and sensor logs will form the core of future claim investigations.

However, this raises crucial questions:

• Who owns the data — the driver, insurer, or manufacturer?

• How is digital evidence verified and stored?

• What happens to consumer privacy when vehicles record continuously?

Insurers will need to develop forensic data capabilities and work with regulators to establish chain-of-custody protocols for admissible evidence. Claims will move from manual garage visits to digital forensics and cloud-based investigations.

6. Reinsurance and Systemic Software Risk

Autonomy introduces new, correlated risks. A single faulty software update could affect thousands of vehicles simultaneously — triggering massive simultaneous claims.

To mitigate this, reinsurers will demand software transparency, failure statistics, and system resilience metrics before underwriting. Parametric reinsurance structures and data-driven catastrophe models will evolve to handle these systemic exposures unique to connected vehicles.

7. Policy and Regulatory Roadmap for India

For India to navigate this transformation effectively, a multi-pronged approach is vital:

• Tiered liability framework based on SAE levels of automation

• Standardized event data protocols to ensure fair evidence handling

• Privacy and consent mechanisms for telematics-driven underwriting

• Regulatory sandboxes for insurer–OEM collaboration

• Public awareness programs explaining how autonomous insurance differs from traditional motor cover

When these pillars align, India can unlock a balanced ecosystem — one that protects consumers, encourages innovation, and builds trust in automated transport.

8. Roadmap for Stakeholders

For Regulators (IRDAI & Ministry of Transport)

• Develop interim guidance for AV data and claim admissibility

• Enable pilot programs for UBI and AV-specific insurance

For Insurers

• Invest in telematics infrastructure and AI-driven underwriting

• Create subrogation frameworks for software or OEM recovery

For OEMs and Tech Firms

• Maintain transparent reliability and safety metrics

• Explore embedded or joint insurance partnerships

For Consumers

• Review policy wording for AV and ADAS coverage

• Understand data-sharing implications before opting for connected policies

9. The Road Ahead

Autonomous insurance isn’t just a risk product — it’s an enabler of innovation. It builds trust between technology and society by offering financial safety nets when algorithms err.

As India’s roads become more intelligent, insurers must evolve from reactive claim-settlers to proactive risk partners — leveraging data, ethics, and empathy in equal measure. The motor insurance of tomorrow won’t just protect vehicles; it will protect the algorithms that move the nation forward.

References / Sources

1. IRDAI Annual Report and Motor Insurance Framework Updates (2024–2025)

2. India Telematics and UBI Market Reports (NASSCOM, Frost & Sullivan, 2024)

3. SAE International — Levels of Driving Automation Guidelines

4. Global AV Liability Studies — OECD & UNECE Reports

5. KPMG and Deloitte India — “Future of Auto Insurance in the Digital Age” (2024)

6. NITI Aayog Discussion Paper on “Safe Autonomous Mobility in India” (2025)

7. Industry white papers from global insurers (Allianz, Swiss Re, AXA) on AV product design