How Fully Autonomous Driving Is Changing Insurance(FSD Insurance) Rules
In 2025, fully autonomous driving is no longer science fiction. With Tesla’s FSD Beta achieving millions of cumulative miles and Waymo, Cruise, and others rolling out robotaxi fleets across major U.S. cities, the car is truly beginning to drive itself. But as technology evolves, a bigger and more complex issue surfaces: Who is responsible when a self-driving car gets into an accident?
This question is no longer theoretical. The answer will reshape insurance contracts, legal definitions, and our understanding of liability in the automotive world.
1. From Driver-Centric to Software-Centric Liability
In traditional car insurance, the driver is almost always considered the primary liability bearer. However, autonomous vehicles shift this responsibility towards software developers and automakers.
- For instance, if a Tesla running on FSD Beta gets into an accident without human intervention, is the driver still liable? Or is Tesla?
- In Germany and the UK, recent court cases have started holding software failures partially accountable.
- In California, AV testing laws already require companies to file incident reports that implicate the vehicle’s decision-making.
Insurance companies are now being forced to rework their underwriting logic. Many are moving towards “product liability” frameworks that mirror how software bugs in medical devices or industrial machinery are handled.
2. New Insurance Models for AVs: Subscription, Tiered Coverage, and Usage-Based Pricing
2025 marks the emergence of new insurance models tailored for autonomous vehicles. Let’s look at three trends:
- OEM-provided Insurance: Tesla now bundles insurance with its FSD package in 12 U.S. states. It uses real-time driving data to calculate premiums.
- Tiered Coverage: Some insurers are offering different rates depending on how often a driver intervenes. The less the driver takes control, the higher the software liability component becomes.
- Pay-per-Mile for FSD: Companies like Metromile and Lemonade are piloting usage-based pricing specifically for self-driving mileage.
These models are gaining favor not only for risk segmentation but also to help regulators track responsibility boundaries.
3. Who Pays When FSD Crashes? Emerging Legal Precedents
When a fully autonomous vehicle crashes into another car or a pedestrian, who pays?
In 2024, a Cruise robotaxi hit a cyclist in San Francisco. The city’s Department of Transportation found Cruise “technically at fault,” despite the absence of a human driver. The incident set a precedent: Liability can be assigned to the operating company or manufacturer.
In the EU, regulators are moving toward a “presumed manufacturer liability” model for Level 4+ autonomy, meaning unless proven otherwise, the automaker is assumed responsible in AV accidents.
Tesla has so far taken a different approach. Its policies still require drivers to stay alert, and FSD Beta is considered Level 2-3, legally leaving room to assign fault to the human.
4. Impact on Premiums: Cheaper or More Expensive?
A big debate: Will autonomous driving make insurance cheaper or more expensive?
- On one hand, FSD promises fewer accidents, especially from drunk driving, fatigue, or distraction.
- On the other hand, when crashes do happen, the payouts are higher due to complex liability and expensive sensor repairs.
According to a 2025 report from Swiss Re, insurance premiums for AVs dropped by 15-20% for urban low-speed usage, but rose by 8-12% for high-speed highway AV operations where sensors and software play a dominant role.
5. Regulatory Dilemma: States Are Not Aligned
One of the biggest issues in 2025 is the lack of standardized regulation across U.S. states and global jurisdictions.
- California and New York are AV-forward, offering clear regulatory definitions for liability.
- Texas and Florida, on the other hand, have more relaxed frameworks, placing responsibility on the driver regardless of autonomy level.
- China and Germany have introduced mandatory third-party software liability insurance for all Level 4+ vehicles.
This fragmentation is causing challenges for insurers and automakers alike. A Tesla insured in California may not be legally covered when driven across state lines into Nevada under FSD mode.
Final Thoughts: Are You Prepared?
If you’re a Tesla owner, or considering buying any vehicle with autonomous capabilities, now is the time to understand how your insurance policy views autonomy. Does it cover incidents under FSD? Does it assign blame to you or the system?
2025 is a landmark year where FSD and insurance finally collide in courtrooms and policy documents, and those caught unprepared could face not only legal trouble—but also unexpected costs.
