Benjamin Franklin, one of the founding fathers of insurance, was the man who founded the first insurance company, Philadelphia Contributionship. It was home/fire insurance. PBS reports that the company issued 143 policies in its first year. The insured property was not set on fire for seven years. Philadelphia actually used the same insurance company scheme as all other companies today. Members of the company paid a sum that could be used to recover financial losses from fire-related causes. This payment is commonly known as insurance premium. Although Benjamin Franklin was a key player in the development of insurance, he wasn’t the first person to introduce auto insurance. In fact, the venture of a car insurance company was started a little before Benjamin Franklin.
The First Known American Automobile Insurance
Car insurance is now considered an essential part of daily life simply because it’s the most popular mode of transportation in the country. Every vehicle owner needs financial protection in the event that an accident results in property damage, injuries, or other financial loss. Detroit is a well-known American city for its automobile industry. Ohio was the home of innovators in this new form of transportation from the late nineteenth century to early twentieth centuries. In Dayton, Ohio, in 1987, the first automobile insurance policy was issued. According to the Ohio Historical Society Gilbert J. Loomis was first to buy car auto liability insurance. Loomis was protected against financial loss or financial responsibility if his car caused damage to other people’s property, killed, or injures someone. These policies are similar to the ones used by American car insurance companies today. The policies issued to Loomis provide an example of the type of financial protection that a car insurance policy should offer.
Since then, the car insurance industry has slowly gained popularity and is now more comprehensive. According to the International Risk Management Institute, the first comprehensive insurance policy offered coverage for theft and fire. Insurance coverage that covered multiple perils began to emerge in 1912. Insurers tried to combine fire, property and liability coverage for automobiles into one policy. Although auto insurance policies have changed a lot, the fundamental principles of coverage remain the same. Although Benjamin Franklin didn’t think about cars when Philadelphia Contribution-ship was founded, he did play a key role in the development of the system and popularized the idea that insurance provides peace of mind for policyholders. The success of automobile manufacturing is due to many factors, including the expansion of the U.S. economy, infrastructure, road development, as well as the rise in “car culture” in the country. Naturally, more accidents and road vehicles have resulted from the country’s rapid growth in vehicle production.
More than 100 people died in an accident every day in 1930. This is not surprising considering that drivers in 1930 did not have to pass strict driver licensing. Most likely, they were not registered for any driver tests. This was due to the lack of driving schools or driver tests. Due to political reactions in 1920s, the government spent more money to improve roads and traffic control systems, as well as vehicle licensing regulations and stricter driver testing. Massachusetts set the standard for driver licensing by establishing it in 1903. However, the state implemented driver licensing only in 1952.
Massachusetts and Connecticut set new standards in the area of financial responsibility and compulsory insurance. Connecticut’s law requires that the driver or the vehicle owner must show proof of financial responsibility for at least $10,000. This is in the event of an accident that results in damages of more than $100, injuries, or death. Drivers were required to follow the law in their first accident.
Car insurance started to spread across the country in nearly all 50 states during 1950. Massachusetts was the only state that required drivers to have car insurance before they could register their vehicles. The same regulation was adopted in New York in 1956. North Carolina followed the same steps the year after. Although each state may have its own requirements, nearly all states created the same type regulation between 1960s and 1970s. The development of compulsory insurance laws is remarkable considering that it was first implemented in 1925 and was subsequently adopted throughout the country by 1970.
