When was car insurance invented?
Posted by at December 28th

Car insurance is the most widely-purchased type of insurance available and is mandatory in 49 of the 50 US states (all except New Hampshire.) Drive without it in these states and you can face stiff penalties and/or lose your license. There’s little question that such insurance is needed. According to AAA, the average property damages and medical expenses stemming from auto accidents in the United States exceeds $164 million each year. But, car insurance wasn’t always a must…or even available. Below is a brief history of how this necessity evolved.

History of Insurance
The concept of insurance grew out of a need to protect shipping companies from cargo losses incurred from mishaps at sea. The earliest written record of coverage dates back to ancient Babylon, where shippers were asked to pay a 20 percent premium against possible cargo loss. Even the Hebrew text, The Talmud, mentions the concept of insurance. By the 17th century, major shipping powers, such as England, had developed a thriving insurance trade, with companies such as Lloyd’s of London emerging as industry powerhouses.

Beginnings of Car Insurance
Car insurance is almost as old as the automobile itself. Remember those first days of driving were largely without rules, codes of conduct or even paved roads. In addition, early cars had a tendency to break down much more easily than today’s models, sometimes sending hapless drivers careening into farmers’ fields, damaging crops. Because of this, early insurance was geared toward protecting land and property owners. There was a public outcry in England in the late 19th century resulting from damage caused to fields and even structures from errant motorists veering out of control. Thus, the first car insurance policy written (in England in 1895) was for liability against such damage. The concept soon traveled across the Atlantic, with the first US auto insurance policy being written in 1898.

Mandatory Auto Insurance
The first state to require liability insurance for all vehicles was Massachusetts, who enacted a law to this effect in 1927. Most other states passed similar legislation in the 1940s as the post-World War II boom brought more and more cars to the road.

Today, car owners can find a huge variety of insurance policies, tailored to their specific needs, from basic liability coverage to a complete comprehensive policy. If you’re in the market for car insurance, let an agent help you find the policy that’s just right for your family and your budget.