The Beginnings of Auto Insurance

by Joe Bella
In the United States and in the United Kingdom, auto insurance is needed before you can get on the road, and it is easy to see why. Even a minor accident can rack up thousands of dollars in car repair costs and injury, and auto insurance ensures that these costs will be taken care of. Insurance is often seen as a calculated risk, but in many places at least auto insurance is required while many people tend to put down more money for full coverage.

At its most basic form, something like auto insurance has existed since people started living and working cooperatively. When one person invests time and effort into a group, they are ensuring that the group will be there for them in the future. In this way, it can be seen that early human interaction had an implied responsibility. In form at least, it's not unlike paying an insurance premium to ensure that if and when something bad happens, there will be something to fall back on.

Even 3000 to 5000 years ago, Babylonian merchants had to pay an extra fee if they were loaning money from a third party. This fee essentially ensured that the if the shipment was stolen, the loan would be canceled. While this fee might have been pricey, it was still better than paying the full cost of the loan should the shipment meet with doom. As one might expect, there were investigations of insurance fraud around at this time!

In the United States, Benjamin Franklin created the first fire insurance available, going so far as to refuse to insure places that he felt were too much of a fire risk. As you can see, then as now, there are some things that an insurance company might refuse to cover, or refuse to cover completely. As auto insurance might not pay off if some conditions are not met, Benjamin Franklin also stated that if buildings were not kept up and proper precautions were not taken, then the policy holder lost the right to the insurance.

Automobile insurance essentially appeared with the first cars, especially due to the fact that they were, at first, mostly the province of the wealthy. It was seen originally as a form of protecting your investment at that point and then as more and more cars appeared on the road, it became a matter of necessity. When you take into account the fact there are so many cars on the road, it only make sense to demand at least minimal coverage. Auto insurance has a long history, and there's a reason that it has been around for as long as it has!
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