Volvo will accept full liability whenever one of its self-driving cars gets into an accident, making it the first major automaker to claim such a position.

Among the most common questions I have seen in articles in the mainstream press, near the top is, “Who is going to be liable in a crash?” Writers always ask it but never answer it. I have often given the joking answer by changing the question to “Who gets sued?” and saying, “In the USA, that’s easy. Everybody will get sued.”

But in reality, in spite of all the writing that this is a hard and central question, the long term answer has always been obvious. If the software/hardware in a car is responsible for the crash (i.e. caused the vehicle to do something like depart its right-of-way) then it’s pretty obvious that the vendor of that car will be liable, or perhaps some proxy for the vendor like a taxi fleet operator.

Today, Volvo declared this to be the case for them and Google has said it as well. Good for them.

The main reason this has sat as an open question for so long is that any lawyer will tell you never to admit in advance that you should be liable for something. From a lawyer’s standpoint, that can never do anything but come back to haunt you later. There’s no upside, and a big downside, so they tell clients not to do it.

It is not just a legal decision. After all, customers are not going to want to buy or even ride in cars if the rule is, “If this car crashes because of our bug, then you (or your insurance) will be liable, and demerit points or even criminal charges might go to you.” Early adopters might accept that but it’s not a workable long-term policy. If the question of points and rare criminal charges could be eliminated, we could see a workable system where the passenger is liable and has insurance to fully cover it, but deep down that’s a silly system; again something only for the early days.

Even if you could get such a system in place with passenger-insurance, the reality is the vendor would still get sued. Even a great policy and indemnification from the passenger would not prevent plaintiff’s lawyers from wanting to go after the deep pocketed vendor. They would look for the hope of negligence (or in their dreams, VW style fraud) to get juicy damages. Even if not directly liable, the vendor would pay more in legal costs for some cases than the cost of the accident.

As I have written before, in today’s world, car accident costs are not paid by individuals or even companies. If I’m liable, my insurance company pays, and every policyholder shares the cost in their premiums. If my car has a defect, the car company pays, but builds in a share of that cost or insurance against it into the price of every car – once again the public shares the cost. This will not change in the world of robocars, and fighting over liability is really just fighting over who the money will flow through, and who will get the burdens and benefits of control of the legal strategy.

This saner approach has the vendor responsible – at least while the car was driving itself – and the vendor self-insuring and getting reinsurance, or product liability insurance, to cover the cost. The cost we currently know very, very well – rooms of actuaries at every auto insurance company study it all day – and we can handle it. (We don’t know the cost of the early, special lawsuits which will be unlike typical car crash cases.)

If the world is rational, the total number of accidents and their severity goes way down, and that cost goes way down with it. The world may not be rational, but ideally this new lower cost is built into the cost of the ride or the car, and we all pay less. Hooray.

For cars that people drive some of the time, traditional insurance will do the job, but it should be billed by the mile – called PAYD or Pay-as-you-drive.

I have a more detailed earlier article on the issues around accidents for those seeking more depth.

Perhaps we can demote this from the most-frequent-questions list. Though the one I really want to get off the list is what happens when a car has to choose between killing two people?