Innocent casualties from driverless car crashes will be protected under new insurance rules, the Department for Transport (DfT) has announced.
A single insurance product will be required to cover both a motorist when they are driving as well as a car when it is in an automated mode.
This will mean people hurt in driverless car crashes that were not their fault will have "quick and easy access to compensation", the DfT said.
The measures, which follow a public consultation, will be set out in a parliamentary bill shortly.
The Secretary of State will have the power to classify which vehicles are automated and subject to the new insurance requirement.
Self-driving cars allow the driver to hand over full control and responsibility when their technologies are activated.
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.
David Williams, head of underwriting at insurance firm AXA UK, expects driverless cars will lead to "substantially reduced premiums" as the number and severity of accidents are cut, reducing the cost of claims.
He described the new rules as a positive step as they enabled the industry to design insurance products appropriately.
"It keeps protection of the general public at its heart which we hope will encourage early adoption of some really impressive technology," he added.
The ABI said it was important to keep insurance for driverless cars "as straightforward as possible".
The DfT also set out measures to boost electric vehicle use.
Motorway services and large fuel retailers could be forced to provide electric charge points and hydrogen refuelling stations.
Data showing the location and availability of charging stations was also set to be made openly available.
Transport minister John Hayes said "we must take action now and be ready to take more action later" to accelerate electric car use.
He accepted that the existing 11,000 charging points around the country must be increased to encourage more motorists to go electric.
AA president Edmund King warned that a paucity of public charging locations was a barrier to electric car ownership.
"The three key barriers to electric car ownership are lack of public charging points; insufficient battery range and high initial vehicle cost," he said.
"We welcome the Government's commitment to low-carbon vehicle technology and the investment in new charging points will help."
Figures from the Society of Motor Manufacturers and Traders (SMMT) show that the alternatively fuelled vehicle (AFV) market grew 19.9% year-on-year in January to take a record 4.2% market share.