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8 Things You Never Knew About the History of Auto Insurance

hands over toy car to represent car insurance

These days, car insurance is a major part of our daily lives. If you drive a car, then most states require that you have liability insurance at a minimum.

However, insurance wasn’t always part of our lives or even legally required. In fact, you’ll discover that car insurance has a long and illustrious history dating back to the time of the Founding Fathers!

Want to learn more about car insurance? Keep reading to discover a few things you never knew about the history of automobile insurance!

The Benjamin Franklin Connection

Perhaps the weirdest thing about auto insurance history is this: we may never have had car insurance if not for Benjamin Franklin!

Franklin wasn’t driving an automobile around, as they hadn’t been invented yet. However, Franklin created the Philadelphia Contributionship in 1751. This was the first company within the American colonies to offer fire insurance.

And the basics of this insurance would sound very familiar to drivers today. Everyone in the Contributorship paid into this insurance plan, and in the event of a fire (which actually didn’t happen during the seven years Franklin’s company was active), the money would be used to render repairs.

In this sense, Benjamin Franklin became more than a Founding Father of the United States. He’s also the “Founding Father” of modern insurance, which would eventually lead to the advent of car insurance.

The First Automobile Insurance Policy

We wouldn’t have the first real automobile insurance policy until 1897. That is when Gilbert J. Loomis took out a policy in Dayton, Ohio.

By modern standards, his car insurance plan was pretty basic. It was basically an early liability insurance plan that offered Loomis protection if his car damaged any property or if he ended up hurting or killing anyone with his vehicle.

Loomis was definitely a trendsetter, though it would take years for car insurance to really catch on as a mainstream policy. And the very fact that he sought out this insurance showed a growing concern about the damage that cars could cause and the potential legal liability issues for drivers.

A Simpler Time

For better or for worse, part of being a trendsetter is that things are much simpler. And this was certainly the case for Loomis and his early automobile insurance policy.

These days, getting an insurance policy requires a small mountain of paperwork. It includes your driver’s license, your vehicle’s VIN, and a thorough understanding of the state’s minimum required insurance coverage.

When Loomis got his policy, none of these things were established yet. This slowly happened over the next century as automobile insurance became mainstream.

Insurance Goes Mainstream

While Loomis got the first policy in 1897, insurance began to catch on in the coming years. And along the way, insurance companies refined their products and services as insurance slowly went mainstream.

And not just car insurance. In 1902, there were new insurance plans to protect people against fire as well as automobile theft. And starting in 1912, insurance companies began offering bundled insurance plans that offered combined protection for automotive, liability, and fire insurance.

By this point, insurance was really catching on with consumers. And a few years later, Massachusetts opened the next chapter of automobile insurance history.

Massachusetts Leads the Way

In these early days of insurance, getting car insurance was completely optional. If somebody wanted to take their chances by driving around without insurance coverage, nothing kept them from doing so.

This began to change in 1927. That was the year that Massachusetts became the first state requiring that drivers have liability insurance.

And the state was a real insurance trailblazer in every sense of the word. While they made liability insurance mandatory in 1927, it would be many decades before this was a requirement throughout the rest of the United States.

The Safe Driver Connection

Looking back, it may be difficult to imagine why the other states were so slow to adopt mandatory automobile insurance policies. But this has almost everything to do with drivers’ attitudes towards the idea of safe driving.

The development of car insurance and safer driving practices went hand in hand. We didn’t have the first driver’s license requirement until 1903. And it wouldn’t be until 1927 that a state-required a licensing examination.

By 1930, only 24 states required drivers to have a license, and only 15 of those licenses required an examination. It took many decades for both of these to become mandatory, and there would later be a fierce debate over seatbelt laws in the 1980s.

In this context, you can see that insurance is pretty intimately tied to the idea of state and governmental regulation. At different points in history, drivers were very resistant to mandatory regulation, and they enjoyed the freedom of driving whenever and however they wanted.

But as the public saw more of the damage that bad drivers could cause, the emphasis on safe driving and mandatory insurance became mainstream.

The Internet Becomes a Game-Changer

happy couple in laptop buying car insurance online

After insurance did become mainstream, the industry was relatively static until the mid-1990s. This was when the advent of the internet changed everything.

Almost overnight, insurance companies could now provide quotes to drivers online. This ended up being a real game-changer: even the smallest local providers got in on the internet. And the booming internet industry saw an increase in the number of car insurance providers.

It was a good time to be a driver. At this point, drivers had more insurance options than ever, and they could compare quotes from multiple providers at the click of a button.

Insurance Meets Technology

What is the future of car insurance? In some ways, that future is already here!

Some companies now allow drivers to plug a device into their car. The purpose of this device is to transmit information about the drivers’ behavior back to the insurance company. Based on information from the device, users can potentially get a discount on their monthly premium.

This is just the tip of the iceberg when it comes to technology and insurance. And we can’t wait to see what happens next!

Finding the Best Car Insurance

Now you know about the surprising history of automobile insurance. But do you know where to get the insurance coverage you need?

We offer the insurance you need at the rates you deserve. To get started, get a quote online, visit us at your nearest local office, or call us at 800-420-3712!