Wetzel Insurance Agency Blog

All You Ever Wanted to Know About Insurance

The History of Auto Insurance

Liability car insurance is required in all 50 states in the US. But this hasn’t always been the case. Have you ever wondered how auto insurance came about? Here is a brief history of auto insurance.

             The first product that resembled auto insurance is actually maritime insurance. China is thought to be the first nation where it was possible to get insurance for goods and products being shipped via boat. With the earliest known insurance beginning all the way back in 3000 B.C.  They were not the only civilization to have maritime insurance either. Ancient Greeks, Babylonians, and the Phoenicians all had different forms of maritime insurance. Ship owners could purchase insurance that gave them compensation in case of pirates, ship wrecks, or loss of merchandise. Maritime insurance continued to be important because of the danger in traveling across the ocean in small wooden ships. These basic forms of maritime insurance are quite similar to modern auto insurance.

                The first actual auto insurance policy was issued in the late 1800’s. There were cars before this time, but they were generally steam powered and weren’t practical. But the invention of the gas powered internal combustion engine changed everything. The year 1893 is when Truman J Martin took out the first liability car insurance policy in the United States. However for over 30 years it wasn’t required to have auto insurance.

                This changed in 1927 when Massachusetts passed the first law that required auto owners to have liability insurance for their vehicles. Although it took decades before the other 49 states followed suite and enacted laws requiring liability insurance. At that time the drivers took all the risk and responsibility in the case of accidents.

                Auto Insurance stayed relatively the same until the mid-1990’s when the internet became prevalent. This allowed many more business to enter into the marketplace and they could now give insurance quotes right in consumers’ homes. Many local insurance agencies started offering these benefits and services as well.  The internet has made a huge impact in many areas of life and this is true for auto insurance. For example some insurance companies offer a device that plugs into your car and wirelessly transmits your driving information to the insurance company. This data can help customers save money on their insurance premiums.

There is much more to the history of auto insurance, but this is the brief overview. Auto insurance is required in all 50 states because accidents are unavoidable and the Chinese recognized this more than 5000 years ago.