The Department for Transport will press ahead with proposals to develop a single insurer model for autonomous vehicles which will cover both the driver and the vehicles when in fully autonomous mode.
The decision follows a consultion period last year when the Government announced it was looking to extend compulsory motor insurance for automated vehicles to include product liability, alongside more detailed proposals concerning the 'state of the art' defence, public sector liability and hacking among others.
A Government report said: "The Government carefully considered the views received from all respondents and has concluded that we will proceed to make the minimum legislative changes required to enable the market to develop appropriate autonomous vehicle (AV) insurance products.
"We will now extend compulsory motor vehicle insurance, creating a single insurer model to protect victums where the AV causes a crash in automated mode.
"The victim will have a direct right against the motor insurer, and the insurer in turn will have a right of recovery against the responsible party to the extent there is a liability under existing laws, including under product liability laws."
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."
Ben Howarth, senior policy adviser for motor and liability at the Association of British Insurers, added: “The insurance industry is 100% 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 Department for Transport will now take the insurance proposals for AVs forward into the Modern Transport Bill, which is due to enter the Houses of Parliament in the New Year.