There are several trials of driverless cars ongoing in the UK.
Car insurance will be extended to automated vehicles "to ensure that compensation claims continue to be paid quickly, fairly and easily", the bill says.
Lawyers have long argued that getting the legal framework right is essential if automated cars are to become popular.
Peter Allchorne, a partner at law firm DAC Beachcroft, said the measures were needed.
"The pace has been picking up on vehicle automation in the last 12 to 18 months and this proposed legislation comes as no surprise."
But, he added: "Legislation enabling driverless cars doesn't mean that there will be a universal buy-in overnight. There is still a degree of public scepticism and these vehicles will be expensive."
Official government research suggests that the market for automated vehicles in the UK will be worth £28bn by 2035.