Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Mar 18, 2022

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Just like the invention of fireworks, the concept of insuring vehicles can be traced to the Chinese as far back as 3000 B.C. Merchants sending boats up and down rivers in China would insure the goods on their boat, to protect against losses due to the boat sinking or being hijacked by pirates. This “marine” insurance expanded as the population increased, ships grew larger, and trade expanded across the oceans. Groups of investors would insure the cargo ships in exchange for a premium. While the risks of sea aren’t exactly like the risks of driving vehicles today, this was critical for many businessmen.

Later, the Greeks, Phoenicians and Babylonians also practiced a form of marine insurance. Even the Code of Hammurabi established a policy of marine insurance. Then in the 11th Century, Danish business owners and investors formed guilds to collectively establish a stronger, larger form of marine insurance that could cover bigger cargos and shipments.

Written records of insurance sprouted from the merchant cities along the Mediterranean, like Venice and Florence. Merchants and investors began to mutually pool their money and charge premiums, which would then be issued to members in the case of loss. This is still the basic form of auto insurance that we practice today.

The first company to handle marine insurance policies was Lloyd’s of London in the early 1700’s. The company had a list of customers and ships, along with their estimated value, and underwrote policies for its clients. Surprisingly, Lloyd’s of London marine insurance is still available in modern day London.

When did the modern car come into play?

Of course, there could be no history of car insurance without the development of the car. While there were many steam-powered vehicles and other types of cars being produced, it wasn’t until 1893 that the first gasoline-powered car was built in the US by Charles and Frank Duryea. This led to the first official sale of an gas powered automobile in the US in 1896. There had long been a particular type of car insurance for these vehicles, based on the marine insurance, to protect owners from loss. Then in Dayton, Ohio in 1897, the first auto insurance policy for liability was issued to a man named Truman J. Martin.

In 1927, Massachusetts passed the first law making it mandatory to have liability car insurance. Decades later, liability car insurance (or some form thereof) is required in all 50 states of the United States. This car insurance covers a vehicle no matter what state the vehicle is operating in. That is, if you buy Illinois car insurance and then get in an accident while vacationing in Nebraska, you will still be covered. However, most states have variances of laws. You should research state-specific laws and company-specific policies to determine your actual coverage.

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What role do mutual companies play in American auto insurance?

The average auto insurance policy in many states of the United States is based on mutual companies. In the early years, it was farmers pooling their money to insure their neighbors’ farms. Today, those same companies insure cars, homes, boats, and much more. Many mutual companies that started with farmers offer competitive insurance rates, comprehensive coverage, and more coverage options than ever before.

In the mid-1990’s the Internet exploded, with new businesses, services and industries being developed in the virtual world.. Many businesses sprouted up that offered car insurance online. Additionally, many brick-and-mortar insurance companies began offering car insurance quotes online.

Today, consumers had a variety of choices to buy car insurance online. Auto insurance companies offer a wide breadth of coverages while keeping insurance premiums at the best level possible for the marketplace. An automobile insurance policy in the 21st century has come a long way from the early days of auto insurance coverage. This is quality coverage offered at an affordable price. Car insurance online is yet another piece of the history of car insurance, and one that has given the consumer a distinct advantage.

If you’re looking for auto insurance coverages, you don’t have to leave your house or pick up the phone. You can enter your zip code and answer a few questions on your phone or computer. Then we’ll get you a few quotes from different companies that serve your area.