The plan will cover a motorist while driving as well as a car when it is in driverless mode.
The UK Government is set to announce a new two-in-one insurance policy for self-driving cars.
The Department for Transport (DfT) is set to introduce the plans which will cover a motorist while driving a car when it is in driverless mode.
The DfT said blameless people hurt in driverless car crashes will now have quick and easy access to compensation.
The proposals, which follow a public consultation, will soon be set out in a parliamentary bill.
Responding to the consultation, the Government amended its insurance proposal and said it plans to supplement the compulsory motor insurance (Part 6 of the Road Traffic Act 1988) to include the use of AVs, and establish a single insurer model, where an insurer covers both the driver’s use of the vehicle and the AV technology.
The Secretary of State will have the power to publish a list that will classify the vehicles or types of vehicles that are AVs, and are therefore subject to the new insurance requirement.
Transport Secretary Chris Grayling said: “Automated vehicles have the potential to transform our roads in the future and make them even safer and easier to use, as well as promising new mobility for those who cannot drive.
“But we must ensure the public is protected in the event of an incident and this week we are introducing the framework to allow insurance for these new technologies.”
A report by the Association of British Insurers (ABI) last week found that motor insurance premiums have hit their highest levels on record as tax hikes and whiplash claims drive prices up.
Commenting on the DfT’s plans for insurance rules for self-driving cars, the ABI senior policy adviser for motor and liability Ben Howarth said: “The insurance industry is 100 per cent committed to supporting the development of automated vehicles, which have the potential to dramatically improve road safety and revolutionise our transport systems.
“We want to keep insurance as straightforward as possible, which is why insurers proposed the simple approach which the Government is now taking forward.”
The first driver-less cars are anticipated to hit the UK roads in 2020.