IIHS-HLDI: ADAS features are expensive but they likely are saving drivers money

Crash avoidance tech is raising and slashing repair costs, Matt Moore, Insurance Institute for Highway Safety-Highway Loss Data Institute (IIHS-HLDI) chief insurance operations officer, said in a recent post on the organization’s website. 

“If you got in a crash, you were probably shocked at the size of the bill,” Moore said. “But if you made it through the week without hitting anything — and without anybody hitting you — you paid nothing. That, in a nutshell, is how crash avoidance systems are saving consumers money even as they also contribute to higher average repair costs: Though they’re expensive to fix, they’re remarkably good at preventing crashes.”

Moore points to a recent HLDI comparison of 2017-2022 model year vehicles with and without a bundle of driver-assistance features. He says the comparison found collision claim severity was about 10% higher for equipped vehicles. 

“That lines up with what we know about sensor replacement,” he writes. 

He adds that the same study found claim frequency was lower for the equipped vehicles. It was about 10% lower for collision claims and 40% lower for property damage liability (PDL) claims. 

“As a result, overall losses, or the total amount it costs insurers to pay for all the claims in a given year, were about 5% lower for collision coverage and almost 30% lower for PDL coverage for the vehicles loaded with crash avoidance features,” he writes. 

He writes that sensors used in automatic emergency braking, blind spot detection, and other crash avoidance systems are often blamed for high repair costs. He also pointed to U.S. Bureau of Labor Statistics data showing that the average price of vehicle repairs has risen more than 40% since 2020; faster than inflation. 

Moore notes other components are increasing the cost of repairs. This includes headlights that have become more sophisticated, SUVs and pickups are dominating the market, and ordinary vehicles stacked with features that were once luxury. He adds that nearly two-thirds of new vehicles now have all-wheel or four-wheel drive and more than half have turbocharged or hybrid engines or are fully electric. 

“All those things contribute to higher repair costs,” Moore said. “Larger vehicles generate more energy when they crash, resulting in more severe damage. Fancier equipment — whether it’s power seats or an elaborate entertainment system — costs more to repair than the old basics. Advanced powertrains sometimes have more components to break and require specialized expertise to fix.”

The cost of repair is more nuanced when it comes to vehicles equipped with ADAS, he writes. 

“If a model equipped with automatic emergency braking, lane departure warning, and blind spot warning and an identical model without those features both get into the same kind of front-to-rear crash, the equipped vehicle will be more costly to repair,” he said. “The sensors are expensive and often require calibration after replacement. On balance, however, these systems are saving drivers money.”

Moore adds that PDL claim severity is 15% higher for crash-avoidance-equipped vehicles. 

“Unless having crash avoidance features magically makes you more likely to hit other cars with crash avoidance features, there’s no way that’s related to the cost of sensor repairs,” he writes. “What’s happening isn’t magic; it’s math. Crash avoidance systems prevent many of the low-speed fender benders that make up the bulk of claims under both collision and PDL coverage. The greater proportion of higher-speed crashes left over pushes up the average claim severity.”

Crash avoidance systems don’t just save companies money, Moore said; on average, drivers of equipped vehicles come out ahead too. 

“After all, every crash avoided is a deductible you don’t need to pay,” he writes. “It’s not all about the money either. Unlike light bars, turbochargers and other features that drive up repair costs, crash avoidance systems have safety benefits, as demonstrated by substantial reductions in injury claim frequencies. That means real pain and suffering avoided — far more important than dollars and cents.”

Images

Photo courtesy of Insurance Institute for Highway Safety-Highway Loss Data Institute (IIHS-HLDI).