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The Rocky Road To Car Insurance

In a time when auto insurance is an absolute necessity, it might surprise you to learn that insurance companies were reluctant to insure cars and their drivers. This is how we got from there to where we are today. 

The Insurance Idea

The idea of insurance, a way of decreasing risk, is actually an old one. Ancient communities formed groups that allowed them to minimize damage in the event of a catastrophe. For example, shipping merchants in ancient China made agreements to spread their merchandise among a number of different ships. This meant that if one ship went down, each merchant lost a portion of goods rather than one merchant losing them all. Roman and Greek societies included groups of individuals who paid fees in exchange for burial expenses when a family member died. 

In this way the idea of controlling large risks through a small sacrifice is an idea that eventually became modern insurance. 

The First Cars

American cars first arrived on the scene in the late 1800s. First electric cars and then gasoline powered vehicles gained popularity. By 1910, many American families owned a car. With no laws governing the rules of the road, no such concept as a right of way and no qualifications to drive a car, automobile accidents became quite common. 

The First Automobile Insurance Policy

Many early insurance companies did not want to offer auto insurance policies. The International Risk Management Institute states that one professional insurance journal in 1903 published the suggestion that insurance companies could “serve the cause of public safety by refusing to insure anyone who has acquired the automobile habit.” They saw cars as simply too new and too risky to be worth insuring. 

In 1897, Travelers became the first company to sell an auto insurance policy. It was sold to a mechanic named Gilbert Loomis and was specially designed to cover cost incurred by horse driven carriage owners when their horses were frightened by cars. 

Early Lawsuits Lead the Way

Car insurance began to change as the times did. When people began being sued over incidents of deaths and injuries due to automobiles, insurance companies began offering policies to cover those situations. Soon car insurance companies were offering policies that would not only pay for damage to another person’s property but also for damage to the insured’s car as well as for theft of the vehicle. 

Now, of course, all drivers are required to have at least some coverage to protect other people who may get hurt by the insured’s car. Talk to your insurance agent, such as Clase Agencies Inc., for more information.

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