I wonder how it will react with the auto insurance industry though. Is Volvo now the insurer? I doubt it. More likely they are taking the "above and beyond" risk if you get sued for more than $1m. That is a pretty small risk in general.
Also what does accepting liability mean? Legally, is the plaintiff then able to sue Volvo as well as the "driver" of the car? Would damages be assessed on the basis of Volvo's net worth and not the drivers? etc etc. Lots of issues to be wrangled over.
I think you misunderstand the idea of liability on a manufacturer here.
Taking a step back, there has been much debate over who would be responsible in the event of a collision when a self-driven car is involved. Most manufacturers have denied all liability, suggesting that drivers are still in some way responsible for the control of the car to the complete exclusion of all manufacturer's defects. To do so would create a reverse onus on the Plaintiff to prove that there was, first, a defect in the car, before the manufacturer would be responsible for defending the action instead of just the owner/operator of the vehicle.
Insurance policies are not the same thing - it does not matter, per se, how much Volvo's policy would cover. It is also not an umbrella policy. Volvo is accepting that if any of its self-driven cars are involved in accidents, it will not claim that liability is statute barred subject to the Plaintiff having the regular onus to prove his/her/their case.
It's a complex way of saying "we will fight you in court rather than ignoring everything and lobbying for the government to legislate that manufacturers cannot be sued." It's a very odd position to take, but definitely a great move from a PR perspective, and one that is unlikely to cost Volvo anything at all.