Self-driving cars may have once felt like a distant dream pulled from science fiction. However, the rise of autonomous vehicles (AVs) is becoming a fast-approaching reality. Companies like Tesla, Waymo (a Google subsidiary), Uber, and Cruise are pushing the boundaries of automation, and now, Canada is following suit. Ontario remains at the forefront of AV testing and regulation, but as we move closer to everyday use of driverless vehicles, important questions about car insurance arise.
If you’re considering leasing, buying, or simply sharing the road with a self-driving car, here’s what you need to know about how autonomous vehicles may affect your auto insurance in Ontario.
What Are Self-Driving Cars?
According to the Ontario Ministry of Transportation (MTO), autonomous vehicles have artificial intelligence (AI), sensors, radar, lidar, and GPS to detect and respond to their environment without direct human input.
There are five recognized levels of vehicle automation:
- Level 1 – Driver Assistance: Basic systems like adaptive cruise control or lane-keeping assistance.
- Level 2 – Partial Automation: The vehicle can control steering and speed but still requires human attention.
- Level 3 – Conditional Automation: The car can manage most tasks, but a human must be ready to intervene.
- Level 4 – High Automation: No driver is needed within certain operational environments (e.g., geofenced cities).
- Level 5 – Full Automation: The vehicle operates completely independently, with no steering wheel or pedals required.
Ontario’s 10-year pilot project for autonomous vehicles, launched in 2016, allows for testing of AVs on public roads. As of 2024, some companies are permitted to test vehicles without a driver physically in the car—paving the way for AV adoption in the near future.
Are Self-Driving Cars Available in Ontario?
While fully autonomous vehicles (Level 4 and 5) are not yet commercially available for Canadian drivers, semi-autonomous features (Levels 2 and 3) are already common in newer vehicles from manufacturers like Tesla, Mercedes-Benz, BMW, and Hyundai.
Ontario is home to Canada’s first AV Innovation Network, and municipalities like Ottawa and Toronto are actively participating in real-world testing. This means it’s only a matter of time before more AVs hit the market and our streets.
How Will Self-Driving Cars Affect Auto Insurance in Ontario?
As automation becomes more widespread, Ontario’s auto insurance industry must adapt. Here’s how self-driving vehicles may disrupt traditional car insurance models:
1. Redefining Liability
Traditionally, insurance premiums are based on human risk factors—such as driving history, age, and location. With AVs, liability may shift from the driver to the manufacturer or software provider if an accident occurs due to a technological malfunction rather than human error.
Expect product liability claims and potential lawsuits involving auto manufacturers, software developers, or parts suppliers in AV-related accidents.
2. Policy and Premium Adjustments
Auto insurance policies will need to evolve to accommodate AV-specific risks. For example:
- Fewer accidents may occur thanks to AVs’ faster reaction times and fewer distractions.
- Repair costs may rise due to the high-tech sensors and components used in self-driving vehicles.
- Cybersecurity coverage may become a new necessity, protecting against vehicle hacking or data breaches.
- Telematics and real-time monitoring will likely become more common, making premiums more usage-based.
3. Claims Processing Complexity
Determining fault in an accident involving a self-driving car could be more complicated and time-consuming. Data from the vehicle’s sensors, software logs, and potentially third-party systems may all be required to process a claim.
This may lead to longer claims timelines and involve more legal scrutiny—especially in the early years of adoption.
4. Insurance Model Innovation
The Insurance Bureau of Canada (IBC) has proposed a new insurance framework for automated vehicles, suggesting:
- A single insurance policy that covers both driver negligence and automated technology failures.
- Access to crash data by all parties involved—insurers, policyholders, and manufacturers.
- Updated federal and provincial regulations to align safety standards with new technology.
Are Self-Driving Cars Safer?
Preliminary studies and simulations suggest that autonomous vehicles could significantly reduce road fatalities. The Canadian Automated Vehicles Centre of Excellence (CAVCOE) reports that AVs could reduce traffic-related deaths by up to 80%, potentially saving tens of thousands of lives annually.
However, safety is still being tested in real-world scenarios. As of 2025:
- AVs are generally safer in controlled environments.
- Most accidents involving AVs are still caused by human drivers of traditional vehicles.
- Concerns remain around ethical decision-making, inclement weather, and system reliability.
What Happens If You’re Involved in an Accident With a Self-Driving Car?
Because AVs challenge the foundation of fault-based insurance, you may face new legal and claims-related hurdles if you’re involved in a collision with a self-driving car.
Key Considerations:
- Manufacturer vs. Driver Fault: If a malfunction caused the crash, a product liability claim may be filed against the automaker.
- Data is Key: Access to the car’s driving data (black box) is essential to establish cause and liability.
- Legal Precedents Still Forming: As of now, each case is treated uniquely, and provincial laws are slowly catching up.
This uncertainty highlights the importance of choosing an insurance provider that stays on top of emerging legislation and AV trends.
Protection in an accident
If you get into a collision with a self-driving car, the IBC recommends the three changes below. These will help make sure people who suffer injuries in collisions with self-driving cars receive compensation fairly and quickly:
- Provide a single policy covering both the driver’s negligence and stating the vehicle’s automated technology.
- Data should be given to the autonomous car’s manufacturer, along with the client and insurer. This ensures everyone is on the same page and has the same information regarding the incident.
- As federal vehicle safety standards are adjusted to meet the needs of self-driving cars, insurers should be aware of them. As such, they should then communicate these new rules to clients.
What Should Ontario Drivers Expect in the Near Future?
Here are some trends to watch as AV adoption grows:
- 2025–2030: Widespread availability of Level 3 and Level 4 vehicles in urban areas.
- Usage-based insurance will become more prevalent as vehicles collect real-time data.
- Insurance bundling for software, vehicle hardware, and cyber protection may emerge.
- New provincial insurance laws will likely be introduced to clarify liability and protect consumers.
Final Thoughts: Are We Ready for the Driverless Future?
Self-driving cars are not just a possibility—they are part of the next wave of innovation in transportation. While fully autonomous vehicles are still a few years away from consumer use in Canada, the insurance industry must begin preparing now. As with any technological advancement, the key lies in balancing innovation with safety and accountability.
At isure, we stay ahead of industry changes to keep you informed. Whether you’re curious about self-driving technology or need help understanding how it might affect your insurance policy, our team is here to help. Contact isure.ca today to speak with one of our expert brokers or get a free quote. Stay tuned to our blog for the latest updates on autonomous vehicles, insurance trends, and what they mean for your future on the road.
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