Insurance and liability in the age of self-driving taxis and private hire vehicles

The arrival of autonomous vehicles (AVs) on UK roads raises one of the most important questions in motoring: who is responsible when there is no driver? The Automated Vehicles Act 2024 has set the foundation, but insurers, regulators and operators are now working through the detail of how liability will work in practice.

Shifting the definition of “driver”

Traditionally, the driver has always been responsible for the vehicle. With AVs, that principle no longer holds. The Act distinguishes between User-in-Charge vehicles, where a human is still present and can retake control, and No-User-in-Charge vehicles, where no driver is onboard.

In the first category, responsibility will still sit with the human when the system is not engaged. When the system is active, however, liability shifts to the manufacturer or operator if something goes wrong. For the second category, the operator of the automated service takes full responsibility, with new regulatory frameworks designed to ensure vehicles are authorised only if they meet high safety standards.

This shift is intended to give the public confidence that in the event of an accident, a clear route to compensation exists without protracted legal battles.

The role of insurers

Insurers will be central to making AVs viable on the road. Under the new framework, policies will extend to cover the operation of the automated system as well as the human driver. That means when the system is in control and fails, the insurer pays out to the injured party, before pursuing recovery from the manufacturer or operator if necessary.

This approach mirrors the model set out in earlier legislation like the Automated and Electric Vehicles Act 2018, which first introduced the principle that victims should be compensated quickly, with liability sorted afterwards between insurers and manufacturers. The 2024 Act now updates and broadens that structure to account for the coming wave of fully driverless services.

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Industry groups such as the Association of British Insurers (ABI) have welcomed the clarity, but stress that more detailed regulations are needed. Questions remain about data access, for example: insurers will need reliable telematics and system logs from AVs to determine what happened in an incident. The industry has called for rules guaranteeing access to this data, while also protecting customer privacy.

Testing the limits

Pilot projects in the UK are already beginning to explore how liability will play out in practice. In the CAVForth autonomous bus trial between Fife and Edinburgh, staff remained onboard, meaning traditional insurance models could still apply. Future services, such as the planned driverless taxi trials in London, will test the “No-User-in-Charge” framework directly.

These pilots are as much about testing governance as technology. They will provide case studies on how insurers handle claims, how liability is divided, and how regulators enforce safety standards.

Local authorities and enforcement

For councils, the new framework also brings new duties. Local licensing officers may find themselves dealing with questions around who holds responsibility for vehicles operating without drivers. Enforcement of safe operations will rest on close collaboration between councils, the Department for Transport and the newly established authorising authorities under the Act.

Given the financial pressures already facing councils, questions have been raised about whether they will have the resources to manage these new responsibilities. Industry observers suggest central government support will be essential, at least in the early years, to avoid uneven application of the law across the country.

Public confidence

Ultimately, the success of the liability framework depends on public trust. If passengers and other road users are confident that compensation routes are clear and fair, uptake of driverless technology is more likely. Conversely, confusion over who pays in the event of an incident could slow adoption.

As AA President Edmund King recently noted, “Safety must be paramount” when AVs are rolled out. That principle extends beyond vehicle performance to the way accidents are investigated and claims are handled.

The Automated Vehicles Act gives the UK a head start compared with many other jurisdictions. But the real test will come when the first fully driverless services begin carrying passengers and real-life insurance claims start to filter through.