Document Type : Original Research Paper

Author

• Hamid Afkar

Assistant Professor, Department of Law, Ma.c., Islamic Azad University, Mashhad, Iran.

Abstract

Background and Objectives: Autonomous Vehicles (AVs) have emerged as one of the most transformative innovations in the global transportation sector, reshaping traditional concepts of driving, liability, and risk management. While these technologies promise improved safety and efficiency, they also introduce complex legal and insurance challenges, particularly in jurisdictions such as Iran, where the third-party liability insurance framework is built on the notion of drivers’ faults. As AVs rely on artificial intelligence and automated systems rather than human operation, determining liability in the event of an accident becomes increasingly complicated. Technical malfunctions, software defects, and cyberattacks pose new categories of risk that the current insurance system is not adequately prepared to address. This study aims to examine the structural limitations of Iran’s insurance system in covering the risks associated with AVs and to propose a set of legal and regulatory reforms capable of aligning the national framework with international standards and emerging technologies. The objective is to develop a coherent policy model that both protects victims and ensures the long-term sustainability of the insurance market in the era of intelligent mobility.
METHODS: This research adopts an analytical–descriptive methodology based on the critical examination of Iran’s current insurance laws, particularly the 2016 Act on Compulsory Third-Party Liability Insurance, and its practical inadequacy in dealing with automated driving systems. The study systematically analyzes the conceptual and legal gaps in attributing liability to non-human agents, such as vehicle manufacturers, software developers, and AI system designers. In addition, it explores comparative international experiences in regulating autonomous vehicle insurance frameworks, drawing insights from legal reforms implemented in Europe, the United Kingdom, Germany, Japan, and the United States. The analysis emphasizes both doctrinal and practical dimensions: (1) the evolution of liability doctrines from fault-based to strict or hybrid liability systems; (2) the emergence of specialized insurance products, including product liability and cyber insurance; and (3) the need for data-driven risk assessment and accident reconstruction mechanisms, such as the mandatory use of vehicle “black boxes.” Through this analytical lens, the research identifies critical deficiencies and formulates policy-oriented recommendations suitable for Iran’s legal and insurance context.
FINDINGS: The study reveals that the current third-party insurance framework in Iran is structurally ill-equipped to accommodate the risks posed by AVs . The primary deficiencies include the difficulty of determining faults when accidents stem from algorithmic errors or mechanical failures, the absence of effective recovery mechanisms against manufacturers or software providers, and the lack of specialized insurance products tailormade to technological risks. Furthermore, existing regulatory mechanisms fail to provide adequate standards for assessing AV-related risks or for calculating insurance premiums. This inadequacy is exacerbated by the limited financial resilience of insurers and the absence of coherent cooperation among regulatory institutions, insurers, automakers, and technology firms. The study also finds that Iran’s current approach — which places liability primarily on drivers — is inconsistent with the technological reality of autonomous systems, where human control is minimized or eliminated. Comparative analysis demonstrates that other jurisdictions have addressed similar issues through a combination of strict manufacturer liability, dual-insurance systems distinguishing between human-operated and automated modes, establishment of compensation funds for untraceable risks, and the integration of advanced data monitoring systems for accident verification. In contrast, Iran’s lack of legislative foresight, technical infrastructure, and expert capacity in interpreting AV-related accidents creates legal ambiguity and procedural delays that undermine both victim compensation and market stability. Moreover, the study highlights the ethical and cyber dimensions of AV risk, emphasizing that without transparent data-sharing mechanisms and cybersecurity coverage, insurers cannot accurately evaluate or price risk exposure. These challenges collectively underscore the urgent need for an adaptive insurance ecosystem capable of addressing multidimensional risks.
CONCLUSION: The findings underscore the necessity of a comprehensive reform of Iran’s third-party liability insurance laws to ensure effective coverage for AV risks. The study proposes a paradigm shift from the traditional fault-based model of civil liability toward a hybrid or strict liability framework that attributes responsibility to manufacturers and technology developers where appropriate. It recommends the development of specialized insurance products — including product liability, cyber, and data-driven policies — designed to distribute risks more equitably among stakeholders. Additionally, the creation of a national database for recording and analyzing autonomous vehicle accidents, the mandatory installation of event data recorders, and the introduction of transparent data-sharing obligations are essential for accurate accident assessment and liability allocation. Institutional coordination among legislators, the Central Insurance of Iran, technology companies, and the automotive industry is vital for implementing these reforms. By adopting a forward-looking regulatory model, Iran can foster innovation while ensuring victim protection and financial sustainability in its insurance market. Ultimately, reforming the insurance framework in alignment with technological progress is not merely a legal necessity but a strategic imperative for integrating autonomous vehicles into Iran’s transportation system in a safe, ethical, and economically viable manner.

Keywords

• Autonomous vehicle
• Insurance premium
• Product liability insurance
• Strict liability
• Third-party insurance

Main Subjects

• Insurance rights