History of Auto insurance in USA


We all know that having auto insurance is mandatory in almost all states in the US. What most people don’t know is how the auto insurance came into existence or even why. In this article, we will be able to clearly see how insurance and auto insurance started.

Commencement of insurance

The main insurance concept has been in existence for as long as humanity has been. The very first insurance policy dates back to the Ancient Babylonian kingdom whereby debtors paid an extra sum of money to their lenders so as to act as security in case their goods were harmed or lost during shipping.
Benjamin Franklin takes credit for reinvigorating the American insurance industry by forming the very first firm in USA, Philadelphia Contributionship that provided fire insurance.
Certainly, insurance has continually advanced in various industries. However, our main focus today will be on history of auto insurance.

Invention of the first automobile

We certainly can’t talk about auto insurance without considering automobiles. Argument on who created the first automobile is a matter of opinion. However, automobiles started with horseless carriages and development of more automobiles continued and with time accidents started to occur on the road.
This instantly resulted into discussions about who would be deemed responsible for property damaged and injuries that were caused by the accidents.

Travelers Insurance Company

Travelers Insurance Company is associated with the commencement of the first auto insurance policies in the USA. Many automobile related events that occurred for the first time in USA happened within Ohio State since it was an automobile development center.
One such event is the first auto insurance policy that Gilbert Loomis bought for his vehicle from the Travelers insurance company in 1897. Despite the fact that it was referred to as the horse & carriage insurance policy, it is considered as the very first auto insurance policy in the US. This policy would compensate any person injured or property damaged in case Loomis was involved in a car accident.
One year after providing Gilbert Loomis with car insurance, Travelers then started writing various policies that they know referred as car insurance policy rather than horse & carriage policies. In 1898, Truman Martin purchased one of the policies in New York.


The auto insurance policies then continued to be adopted in different places in America until it finally became a law. Car insurance has really developed since the first policy to the extent most people who currently owns a car have purchased an insurance policy for their car.

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