Investors sank more than $1 billion into auto tech companies in 2016 alone. With that kind of funding, the question isn’t whether self-driving cars will change everything about how we get around, but how soon.

Experts also predict a shake-up in the auto insurance industry, with self-driving cars leading to fewer accidents. Does this mean you can stop paying for car insurance as soon as your autopilot-enabled Tesla rolls off the line? Not quite.

Here’s a look at where autonomous vehicles are now, where they’re going, and how being a backseat driver in your own car might affect your need for auto insurance.
Self-driving cars: Today

We’re still in the early levels of autonomous vehicle development, but a recent white paper by research advisory firm KPMG concluded that driverless cars will arrive sooner than previously predicted.

Many newer vehicles already have automatic features that help prevent accidents (Level 1 in the table above). These include lane-departure warnings, adaptive cruise control and collision-avoidance braking.

According to a 2016 report published by the Insurance Institute for Highway Safety, “vehicles equipped with front crash prevention are much less likely to rear-end other vehicles.” The IIHS found that automatic braking systems reduced rear-end crashes by about 40% on average, while forward collision warning systems cut them by 23%.

Insurance prediction: Because accident-prevention features appear to reduce the likelihood of claims, a small number of insurers already provide discounts for drivers whose cars have them. If these technologies prove to reduce claims, more companies will follow suit.

Self-driving cars: Early 2020s to late 2030s

In 2015, KPMG predicted that the transition from human-driven cars to self-driving cars would be incremental, becoming the “new normal” by the year 2040. Just two years later, “leap-frogging” tech developments compelled them to shave five years off this prediction.

During this period, fully autonomous vehicles — not just prototypes in testing — will become available to the general public. Industry Analyst IHS Automotive expects them to cost about $3,000 more than traditional vehicles in 2035, down from $10,000 more in 2025, when the vehicles are less common.

Ownership won’t be the only way to test a self-driving car. Ridesharing companies such as Uber and Lyft will use more of them to pick up customers. These experiences will likely help the average consumer become more comfortable with autonomous technology, and might motivate people to buy self-driving cars as they decrease in price.

A growing number of the human-driven vehicles made during this time will come with semi-automated capabilities that control acceleration, braking and even steering (Levels 2 and 3).

Insurance prediction: Car insurance premiums will decline steeply during this time, according to Donald Light, a research director for technology consultant Celent. Fewer accidents among self-driving cars, combined with vehicle-to-vehicle communications and collision avoidance systems, will reduce premiums by “over 50%,” he predicts.

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