As self-driving cars inch closer to the mainstream, one of the biggest unanswered questions isn’t just how they’ll navigate traffic—but how they’ll reshape risk. If there’s no driver behind the wheel, is it still “driver error”? And if the software crashes, will the insurer or the carmaker pick up the tab?

Earlier this month at the Berkshire Hathaway BRK BRK.B)) annual shareholders meeting, that question was posed to Warren Buffett and Ajit Jain, the company’s vice chairman of insurance.

“Wouldn’t what we call auto insurance today just become product liability for autonomous vehicles and autonomous software companies?” the attendee asked.

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Ajit answered first, laying it out clearly:

“There’s no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality,” he said. 

“Most of the insurance that is sold and bought revolves around operator errors… To the extent these new self-driving cars are more safe and are involved in fewer accidents, that insurance will be less required. Instead, it’ll be substituted by, as you mentioned, product liability.”

He confirmed that Geico and other insurers are already trying to prepare for the shift—from covering human mistakes to covering technology failures.

“We move from providing insurance for operator errors and be more ready to provide protection for product errors and errors and omissions in the construction of these automobiles,” he said.

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Buffett followed up with a bigger-picture take on how Berkshire thinks about change—across all its businesses.

“We expect change in all our businesses,” Buffett said. “If the game didn’t change at all, it really wouldn’t be very interesting.”

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He compared the need for change to sports: if every swing in baseball resulted in a home run, or every golf shot became a hole-in-one, the game wouldn’t be worth playing. Challenges keep it engaging—and thinking through those challenges is part of what keeps companies and people sharp.

“Your brain would turn to mush if you didn’t have a few problems now and then,” he added.

Buffett acknowledged that while auto insurance will change, it’s striking how little it has changed so far. He noted how transportation itself evolved drastically over the last two centuries, and no one really knows how it will look in the next hundred years.

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But while driving deaths have dropped dramatically—from six per 100 million miles driven to just over one—insurance costs have skyrocketed. He recalled walking into Geico’s office in 1950 when the average policy cost was “around 40 bucks a year.” Now? It’s not unusual to see policies climb into the $2,000+ range—and higher in urban areas.

Jain chimed back in with one more important point: autonomous driving might reduce accidents overall, but it doesn’t mean insurance will get cheaper.

“The number of accidents will drop dramatically because of automatic driving,” he said. “But on the other hand, the cost per repair every time there’s an accident will go up very significantly because of the amount of technology that’s going into the car.”

So while Geico and others may sell fewer policies for human error, the cost of insuring the tech itself could be just as complex—if not more.

Buffett closed the conversation with a philosophical note about change and uncertainty:

“You deal with the world as it develops. You never reach an answer in this business—you reach a point of action that you take.”

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Image: Midjourney