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The biggest problem facing driverless technology isn't a carmaker's ability to install the computer and sensors that willpropel a car down an interstate at 70 mph. Both Honda and Googlehave already done that.

The two bigger problems are:

• When driverless cars must wind through urban areas where acrisis awaits on every corner: pedestrians on cell phones, childrenchasing after balls and the inevitable detour or "road underconstruction" sign.
• The clusters of laws, customs and, of course, car insuranceimplications of going driverless.

It is these two obstacles that Peter Sweatman, head of theMobility Transformation Center (MTC) at the University ofMichigan's Ann Arbor campus, and the MTC hope to navigate, with thehelp of a public-private partnership that includes five majorcarmakers, State Farm Mutual, Verizon Communications and XeroxCorp., which does logistical city planning.

Driverless car lingo: V2V and V2I

Sweatman and the University of Michigan ultimately want tocreate a "connected environment" where cars not only see the roadahead and behind, but also where vehicles "talk" to one another andto the "interface," meaning the road on which they are driving.

This is how it works: If your car is driverless — and therefore"intelligent" — it's aware of what's happening with other cars onthe road and can stop itself at an intersection if a car coming theother way is going too fast. It helps if that car is alsointelligent and signals its approach. This is known as V2V or"vehicle to vehicle" communication.

But Sweatman and the MTC take this a step further. Theintersection itself will "talk" to the cars. For example, therailroad crossing sign will signal to cars that a train is coming.This is called V2I or "vehicle to interface" communication.

Pedestrians could also be safer. Your smartphone wouldconstantly send out a signal that the driverless car couldrecognize. If you unwittingly step out between parked cars, theoncoming driverless car will recognize the cellphone signal andbrake to avoid a collision before thevisual sensor on the car sees you.

Redefining the American road

American roads will never be the same if the MTC, and otherprojects like it, succeed. Sweatman's first and foremost goal is toreduce motor-vehicle fatalities and injuries "by a factor of 10."There are about 30,800 fatal car crashes a year, according to theNational Highway Traffic Safety Administration.

Your drive-time would be cut in half, and parking mishaps — amajor cause of fender-benders and minor accidents — would declineas driverless cars "valeted" their drivers to the entrance of themall, parked themselves, and then returned for pickup when signaledby a cellphone.

This is why the nation's largest auto insurancecompany, StateFarm, is staking its claim in the MTC, the only insurer to doso.

"This could allow us to get ahead of the curve," says CarolCsanda, director of strategic resources for State Farm and a memberof the MTC's leadership team. "New safety features mean that wewill crash less and when we do crash, the severity will beless."

Car insurance savings not a guarantee

So does this mean that car insurance rates will come down? Notso fast. State Farm, along with every other auto insurer, bases itsrates on the millions of pieces of data it has accumulated fordecades. And that won't change overnight. It will take a whilebefore driverless-car data can make a dent in rate-settinganalysis.

But Csanda predicts that road tests of driverless cars couldspeed up the process. If State Farm gets "useful data" showing thatnewer cars are safer, then rates willprobably come down for owners of those models.

Adding all the technology to cars will also add to the price, soany car insurance savings may be offset by the additional vehiclecost.

Competition to cooperation

The MTC is just starting a seven-year driverless-car journey,which will cost an estimated $100 million and include not only acrowded citylike research facility with fire hydrants andmechanized pedestrians, but also real-world driving around AnnArbor, where the University of Michigan and the MTC arelocated.

Sweatman says one of the biggest advantages of the MTC is itsability to bring together competitors like Ford, General Motors,Honda, Nissan and Toyota, along with auto-parts makers like Delphi,Econolite and Robert Bosch, to lend their latest vehicles andtechnology.

Noticeably absent from the participants is Google. The Internetgiant is working with the California Department of Motor Vehicles,which hopes to have rules in place by January to enable driverlesscars on public roads. Elon Musk's Tesla Motors, Mercedes-Benz and ahost of others are also planning to compete.

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