Car Insurance Throughout History: Important Innovations in Insurance Law

You can hardly go anywhere today without some sort of automized transport. Of course, the most common form of transport is car, though public transportation is becoming more popular in the advent of the “green” movement and the rise of gas prices. Automobile history buffs abound, but most focus on the cars themselves, not the other aspects of the evolution of automobiles in society. Here is a brief synopsis of the timeline of automobile insurance.

Of course, cars are not specific to just one country, and being as such, each country has their own version of history. England has a different perspective than the United States, and there are at least two states in the U.S. that claim to have been the location of the first automobile insurance policy. This article will focus on car insurance in the United States and will elaborate on any inconsistencies or unverified stories that it explores.

The Invention of the Automobile

We wouldn’t need car insurance if we didn’t have cars, now would we? Henry Ford is commonly thought of as the inventor of the motor vehicle, but this is simply not true. Richard Dudgeon produced a steam-powered automobile in 1866. Several people also patented gas-powered automobiles before Ford, most notably Karl Benz in Germany. The first successful gas-engined car was patented by Charles and Frank Duryea in 1983. The brothers went on to open the first car manufacturing factory in the United States.

Mass Production and Affordability

What Henry Ford did do was make automobiles affordable for the common man. In 1906, with the introduction of the Model T Ford, cars became more commonplace on the road. With this increase in use, there was, predictably, and increase in automobile related accidents. Since a car was a serious investment, people started seeking insurance so that an accident could not rid them of their most valuable asset.

The Birth of Car Insurance

In an effort to establish themselves as one of the front-running locations in the automobile boom, Dayton Ohio claims to be the home of the world’s first automobile insurance policy in 1897. This liability policy was held purchased by a Mr. Gilbert Loomis for one thousand dollars from the Travel Insurance Company.

Other sources claim that Martin Truman held the first automobile insurance policy, also a liability policy, in 1889. Both of these claims were to protect their assets if their vehicle was responsible for harm to a person’s health or possessions.

Whenever the first policy was actually placed, it is clear that there was a need for automobile insurance. This need only increased with the release of the Model T. In 1907, the first insurance company specifically for automobiles was established. This was AMICA, and the company still exists today. Twenty years later, Progressive Insurance was created. They tried to set themselves apart by offering coverage to drivers who were rejected by other companies and by offering side-by-side comparisons of their quotes with those of other insurance firms.

Insurance Laws

In 1927, Massachussetts became the first state to require car owners to have car insurance. They were followed by most other states, with the stragglers making drivers financially responsible for their vehicles by the 1940s, as more and more people were getting cars after the wars. With government involvement in insurance a boom of automobile accident attorneys naturally followed to lend order to the madness of liability conflicts.

In the early 60s, cars began to be manufactured with seatbelt, airbags, and other safety features. The presence of these features lowered insurance premiums for those vehicles, which encouraged car manufacturers to continue to work on improving the safety of their vehicles.

No Fault Insurance

No-fault insurance has existed since the 1930s, but in the 70s many states defaulted to this style of insurance. Under no-fault insurance, victims are limited in the amount of financial renumeration they are allowed to seek from the at-fault driver in an incident. Though 24 states had implemented this system in the 70s, today only 12 states have not gone back to the traditional insurance system.

Government Regulation

There have been several states that have implemented limits on insurance premiums, resulting in insurance companies threatening to relocate. None of these limitations have been in effect for an extended amount of time.

Current Day

Insurance today has similarities to that in the early 20th century, but has made great advances as well. Today, a large percentage of insurance policies are started, managed, and maintained online. There are also an increasing number of companies that combine house, life, and automobile insurance. Mandatory-seatbelt and anti-texting laws have added to the number of infractions that drivers are susceptible to that can drive up their insurance rates.

There are discounts for driving safely, being a good student, and other not-necessarily-driving related tasks. Credit score is often an issue when trying to get a claim. Insurance companies justify this by stating that people who are financially responsible are more likely to be reliable drivers.

Alan Brady is a blogging enthusiast who researches and writes about all things tech, automobile, and law. He currently writes with, helping educate on all things auto accident, and when to contact a car accident lawyer.

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