ADAS safety comes with a costly catch
Advanced driver-assistance systems (ADAS) like automatic emergency braking have been making roads safer for years, but their presence can be viewed as a double-edged sword given their negative impact on auto insurance claims. On the upside, in 2022, AAA reported how Insurance Institute for Highway Safety (IIHS) data from 2010-2015 found that vehicles equipped with automatic emergency braking exhibited a 50% decrease in police-reported rear-end crashes relative to equivalent cars without the system. Another study found that automatic emergency braking systems reduced the U.K.’s number of claims by 25% over five years, but it discovered that claim costs increased by a whopping 60%, according to Carscoops.
On the downside, expenses for fixing ADAS require pricey components like cameras, LiDAR, and radar, and the proper equipment necessary for their calibration. Equipment for calibrating these parts can cost up to $1 million, making it difficult for the average corner garage to invest. To make matters more complicated, automakers are committed to making features like automatic emergency braking an essential part of all new cars by 2029, as outlined in the Federal Register.
More expensive repairs don’t always equal higher insurance premiums, some experts say
Additional examples of ADAS include, but aren’t limited to, lane departure warning or prevention, parking sensors, and blind-spot monitoring. Essentially, anything adding to an insurer’s losses can raise your premium. ADAS components are often located outside a vehicle, increasing the chances of damage during an accident. A 2023 report by AAA discovered that ADAS repairs represented a 36% average of the total cost of repairs in four common collision scenarios. Additionally, ADAS accounted for 40.9% of total repair costs in rear collision repairs. However, Tony Cotto, Director of Auto and Underwriting policy at the National Association of Mutual Insurance Companies (NAMIC), said: “We’re seeing AEB, especially, really bring down rear-end crashes, and some of those are the lower-dollar-value claims,” according to Bankrate.
In other words, reducing the frequency of small claims, even if remaining claims are higher, reduces overall losses for insurers, potentially reducing premiums. Jessica Cicchino, IIHS senior vice president for research, echoed this sentiment: “Across the board, insurers are paying out less money on claims for vehicles with [AEB] systems because the reduction in crashes is outweighing the increase in the cost.” However, this doesn’t rule out the possibility of drivers with ADAS facing higher repair costs if they get into accidents, especially with how precise the repairs are. Automotive News reports that: “Sensor[s] misaligned by a single degree—about the depth of a business card—can throw it [radar sensors] off target by 66 inches at a distance of 100 yards.”
Final thoughts
While the belief that ADAS is increasing insurance premiums through higher claims isn’t universally held among experts, some drivers repairing these systems won’t be able to avoid a higher bill, and this won’t change until the tech gets more affordable. A Wall Street Journal article from November cited vehicle maintenance and repair costs as increasing 28% over the past three years, and during Q2 2024, the average repair cost for an insurance claim was $4,721—up about $800 from over three years ago.
