117 Years Old and Still Going Strong

History of Auto Insurance

As anyone who drives a car knows, having auto insurance is just as necessary as having a driver’s license. Sure, passing a written exam and driving test will get you a license to drive. But before you take your car for a spin, you’ll have to comply with state laws and purchase auto insurance. And if you’ve ever wondered why it’s necessary, here’s a brief history lesson.

Although Detroit has long been considered the center of American automobile manufacturing, the Motor City wasn’t always at the forefront of the transportation industry. In fact, much of the car manufacturing activity was taking place in Cleveland and other parts of Ohio during the late 19th and early 20th centuries.

In the early days of the automobile, the first drivers on the road were at a high risk of being involved in an accident. At that point in history, DMV didn’t exist as we know it today, and getting permission to drive a vehicle was as easy as paying a small fee at a licensing office. Most drivers at the time were not trained or tested to operate an automobile. And to make matters worse, the first roads – mostly unpaved and unmonitored – didn’t have the safety measures we have in place today, such as stop signs, traffic lights or right-of-way rules. As you can imagine, these circumstances made for very unsafe roads and accidents waiting to happen.

History of auto insurance facts:

•    1897 – First auto liability insurance policy written in Dayton, Ohio, for Gilbert J. Loomis.
o    Sold by the Travelers Insurance Company for $1,000.
•    1902 – First automobile fire and theft policies became available
•    1927 – Massachusetts made history by becoming the first state to make auto insurance mandatory
•    1930 – Car accident fatalities reached 110 per day

As car manufacturing skyrocketed and more drivers took to the road, it became increasingly necessary to have liability auto insurance for protection against economic losses. This, of course, created a new market for auto insurance. As times changed, so did the needs of drivers. Soon after Massachusetts required auto insurance, more states followed its lead and eventually most made it a requirement for drivers.

In the following years, insurance companies continued to evolve and began offering different types of insurance protection to meet the growing needs of drivers.

It was also during the first half of the 20th century that the auto insurance industry grew by leaps and bounds, thanks in part to an expanding U.S. economy and the rise of the car culture.  And, of course, the rapid growth of the car culture gave way to a dramatic increase in accidents. In an effort to make the roads safer for everyone, governments at the state and federal levels began to invest in better roads and traffic control, as well as stricter driver and vehicle licensing requirements.

A quick look at the history of auto insurance reveals why drivers today are required to purchase this type of protection. In a nutshell, there was – and there still is –a real need for financial protection. Now, aren’t you glad you’ve got car insurance?

Do you think today’s car insurance policies provide enough protection?  Feel free to share your thoughts in the comments section below.