AV crashes will present automakers with complicated new questions about liability. To prepare for them, they will need to rethink their warranties and indemnities with suppliers.
Why it matters: An AV accident could be caused by anything from a programming bug to a mechanical failure. Given this complexity, automakers will need contracts that protect them from assuming liability for integrated software and hardware from their suppliers.
Background: Most supplier contracts protect automakers with warranties against defects in materials or workmanship. However, those may not offer much protection in the case of AVs, where the product under contract is likely to be software, or a part so deeply integrated that it's hard to say where its role ends and another's begins.
The bottom line: By adapting to these legal challenges now, in both supplier contracts and insurance needs, companies can better allocate risks across the supply chain and protect consumers from being left empty-handed if their AV causes an accident.
This article was originally published by Axios.