Shortly after the first cars were invented, it became clear that car insurance would be necessary — it’s the best way to make sure that drivers can pay for any damage or injuries they cause in a car accident.
The very first liability car insurance policy in the United States was sold at the very end of the 19th century, and comprehensive insurance was introduced a few years later with the creation of fire and theft auto insurance in 1902. [1]
When did people start having car insurance?
Americans have been buying car insurance for more than 120 years, but there were only a few thousand cars in the country from 1890-1910, so states hadn’t written any laws about car insurance requirements at that time. [2]
But individual states started creating car insurance laws as early as 1925, and by the 1970s the majority of states had laws requiring drivers to buy a minimum amount of liability coverage. Currently, every U.S. state except Virginia and New Hampshire require drivers to have a minimum amount of car insurance.
When was each insurance company created?
Car insurance has been around for more than a hundred years, and other types of property insurance have been around for significantly longer than that, so it isn’t surprising that some of the biggest names in the insurance industry got their start in the late 1800s and early 1900s.
Company | Year founded | Average annual premium for full coverage |
|---|---|---|
Travelers | 1853 | $1,580 |
Metlife | 1898 | $2,431 |
USAA | 1922 | $1,048 |
State Farm | 1922 | $1,383 |
Nationwide | 1926 | $1,463 |
Farmers | 1928 | $1,934 |
Allstate | 1931 | $1,974 |
GEICO | 1936 | $1,187 |
Progressive | 1937 | $1,758 |
What is the oldest car insurance company?
There is some argument over when the first auto insurance policy was sold in the United States. According to the U.S. Census Bureau, the very first car insurance policy sold in the U.S. was sold by Travelers in 1898. [3] Dr. Truman Martin of Buffalo, New York purchased the policy, buying $5,000 in liability coverage for $12.25, which is the equivalent of more than $347.89 today.
However, the Ohio Historical Society says Travelers sold a $1,000 liability car insurance policy to Gilbert J. Loomis of Dayton, Ohio in 1897. [4] Either way, Travelers was the company that sold the very first auto insurance policy in the U.S., making it the oldest car insurance company in the nation.
What about the oldest insurance company?
On a more global scale, the oldest insurance company in the world (that’s still in existence today) is RSA Group. Founded in 1710, the company was originally known as the Sun Fire Office and was created in the aftermath of the Great Fire of London. [5]
Today the company sells a wide variety of insurance products, including car insurance, home insurance, and pet insurance. While it didn’t start off selling car insurance, the fact that Royal and Sun Alliance sells car insurance policies today technically makes it the oldest continuously operating car insurance company on the planet.
Why was auto insurance created?
Liability car insurance was created to help pay for the expenses associated with an at-fault accident. Like most other types of insurance, auto insurance was created because there is a financial need for it. Though it may sound extreme, without car insurance, most people are one bad accident away from losing everything.
For example, if you are at fault in an accident and you’re responsible for totaling someone else’s Audi Q8 you will be legally required to pay the cost to replace the car, which could cost you more than $70,000 out-of-pocket.
Most people don’t have $70,000 sitting around in case they total someone else’s car, which means drivers who don’t have auto insurance would be required by the court to find another way to pay that cost, possibly by selling their house or having their paycheck garnished for years on end.
If you injured someone in that accident you would also be responsible for paying their medical bills, which could cost tens or even hundreds of thousands of dollars.
Depending on the circumstances, the at-fault driver could lose everything they own and still not come close to covering the costs of the accident, which would leave both parties financially destitute. Car insurance was created and, later, required by law in almost every state to protect everyone involved in a car accident.
Why is car insurance mandatory?
Car insurance is mandatory because every driver is legally responsible for any damage they cause to other people and their property. If you hit someone else’s car, you are required to pay for any medical expenses caused by the accident and the cost of repairing or replacing their vehicle.
Most people don’t have tens of thousands of dollars (or more) to pay for the damage they cause in an at-fault accident, so most states require drivers to buy a minimum amount of liability coverage. This protects people who were hit by another driver from being left unable to pay for their expenses and the at-fault driver who would be held responsible for their expenses in court.
Frequently asked questions
Who invented insurance?
The very first car insurance policy was sold by Traveler’s in 1897 or 1898, but the concept of insurance is much older. The Code of Hammurabi, written in 1755 BC, mentions that Babylonian merchants who took out a loan to fund their shipping business could pay an extra fee to have the loan forgiven in case of a shipwreck, so insurance has clearly been around for several millennia.
What is the oldest insurance company in America?
In 1752, Ben Franklin cofounded the Philadelphia Conservatorship. The mutual insurance company was designed to protect against losses caused by fire, modeled after insurance companies in London that were established in the 1600s.
Where is the insurance capital of the world?
Hartford, Connecticut, was nicknamed the insurance capital of the world in the 1800s when a number of insurance companies set up headquarters in the city. While Hartford is still home to a significant number of insurance company headquarters, other cities have also become hubs for the insurance industry, including New York City and Des Moines, Iowa.
When did car insurance become a legal requirement?
Insurance laws are set by the state, which means there was no one law that made insurance a requirement in the United States. For example, Massachusetts put laws in place requiring drivers to have liability insurance for their cars in 1925, but New Hampshire still doesn’t have mandatory auto insurance laws.
Methodology
Policygenius has analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C.
For full coverage policies, the following coverage limits were used:
Bodily injury liability: 50/100
Property damage liability: $50,000
Uninsured/underinsured motorist: 50/100
Comprehensive: $500 deductible
Collision: $500 deductible
In some cases, additional coverages were added where required by the state or insurer.
Rates for overall average rate, rates by ZIP code, and cheapest companies determined using averages for single drivers age 30, 35, and 45. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles per year.
Rates for driving violations and “poor” credit were determined using average rates for a single male 30-year-old driver with a credit score under 578.
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.
