Legal liability seems to be a red herring IMHO. At the end of the day, it's an insurance company that pays for it all anyway, regardless of whose fault it is. And car insurance companies already have the capability to adjudicate and litigate a large number of crash-related legal challenges. If anything, Google could use the data collected by its autonomous vehicles to streamline that process.
If I were Google, I would just make some kind of deal with an insurance company to handle all scenarios where a crash occurs when a vehicle is in autonomous mode and bundle said insurance in with the cost of the vehicle.
Exactly. Who's at fault in a self-driving car crash? The car model+software combination (unless the driver explicitly did something negligent or reckless). But the insurance company will cover it, and simply adjust the cost of insurance each year based on how often that model+software combination crashed in the previous year.
If I were Google, I would just make some kind of deal with an insurance company to handle all scenarios where a crash occurs when a vehicle is in autonomous mode and bundle said insurance in with the cost of the vehicle.