A requirement of legal and responsible adulthood, one of the necessary evils of our day is the purchase of automobile insurance.
It is an unusual purchase as it is the only product you will ever buy hoping never to use. That being said, where did the idea of insurance start in the first place?
Electricity and Insurance, Too
The earliest recorded history of insurance dates back to the ancient Babylonians. Babylonian merchants would purchase insurance policies to cover goods that had yet to be delivered. That way, if something happened in transit, the insurance would cover their losses.
In the United States, when he wasn’t busy inventing bifocals or flying his kite in the rain, Benjamin Franklin established an insurance company known as the Philadelphia Contributionship.
This awkwardly named company predominantly offered fire insurance on dwellings. Founded in 1835, the Contributionship is still in business today.
What About Cars?
At the inception of Franklin’s brainchild, there was no need for auto insurance as the automobile had yet to be invented. It wasn’t until later in the century that the Traveler’s Insurance Company sold its first ever car insurance policy to Ohio resident Gilbert Loomis.
It was a liability only policy which was probably sufficient as there were so few cars there was a much greater chance that he would run into something rather than having someone run into him.
Looking More Like Today
In the early 1900s, car insurance policies became available that also offered protections against fire and theft. These policies represented the beginnings of the multi-line policies available today.
It’s Not Just a Good Idea, It’s the Law
As the automobile gained popularity, more sales meant more crashes. Soon the courts were filled with lawsuits seeking redress for the resulting damages. In 1925, the state of Connecticut began requiring drivers to prove financial ability to cover the costs of an accident before they could take to the roads.
While this proof could be provided through the use of bank statements or other methods, the easiest proof could be made by producing evidence of the possession of liability insurance. Massachusetts was the next state to fall in line and effectively one-upped Connecticut by requiring that proof of insurance must be presented not just before driving an automobile but before even registering it.
Other states quickly followed, and now all states require some level of insurance coverage on every automobile by law.
Today is hard to imagine a time when drivers didn’t universally carry insurance. The aftermath of a collision can be very expensive and, without insurance, an individual could find themselves in dire financial straits.
Imagine the costs incurred by an uninsured driver who must pay the balance on a car he can no longer use, secure alternate transportation they can probably ill afford and also bear the responsibility of covering the expenses of the other motorist.
Even if carrying insurance was not the law, it would be a very foolish thing not to have it.
Paying too much for your insurance? Did you know that taking our 4 hour defensive driving course online could earn you with discounts on your premiums that is good for three years?