When did required car insurance start?

Required car insurance started in in 1927, in the state of Massachusetts. By 1950, car insurance minimums were required by law in most states. Required car insurance coverage in your state can vary, so enter your ZIP code below to get free car insurance quotes for the minimum required car insurance and a full coverage policy.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Aug 14, 2020

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Here's what you need to know...

  • The first car insurance policy went into effect on February 1, 1898, courtesy of Travelers Insurance Company
  • In 1927, lawmakers in Massachusetts mandated liability insurance for all automobiles
  • Liability car insurance does not cover the driver or the car. Instead, it covers bodily or vehicular damage to the other party or parties in the event of a crash

When did it become a requirement to have auto insurance coverage? Why is car insurance required by law? Read on to learn about the first auto insurance policy, the first auto insurance requirements, and today’s car insurance laws.

The first car insurance policy was created on February 1, 1898, by Travelers Insurance Company. It was sold to Dr. Truman J. Martin of Buffalo, NY, as a way to protect the gentleman’s finances in the case of an accident with a horse.

Lawmakers in Massachusetts mandated liability insurance in 1927, starting a trend that swept through most of the United States by the early 1950s. Insurance became a way of life for a vast majority of Americans.

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What are Today’s Car Insurance Requirements?

Most states require minimum liability insurance coverage. The ones that don’t are New Hampshire, South Carolina, Tennessee, Virginia, and Wisconsin.

While these five states don’t dictate certain levels of liability coverage, they do address the issue in their statutes. Tennessee requires proof of financial responsibility, meaning that residents must furnish proof of a) car insurance or b) the ability to pay for damages in the event of an accident.

South Carolina and Virginia assess a fee to those who register as uninsured drivers with the Department of Motor Vehicles. New Hampshire requires uninsured motorist coverage in all cases and will require liability insurance in certain situations.

Liability car insurance does not cover the driver or the car. Instead, it covers bodily or vehicular damage to the other party or parties in the event of a crash.

An important factor when it comes to liability coverage is the “liability limit.” That is the maximum amount the insurance provider will pay out for an accident.

If the damage exceeds the amount covered by the policy, it’s the individual, not the insurance company, that may be sued for the remainder.

While many states stipulate bare bones limits in the $20,000 to $25,000 range, this may not be enough to protect the  even the livelihood of the insured in the event of a lawsuit.

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What Happens if you Don’t Have Required Car Insurance?

The penalties for driving without car insurance vary across the United States, ranging from a fine of $500 all the way up to months in jail. The middle ground holds possibilities such as impounding and a suspended license.

The agency governing motor vehicles in each state provides its residents with all the details related to minimum levels of required car insurance as well as the penalty for not having it.

Some states will give first-time offenders a slap on the wrist while others reserve the right to suspend a driver’s license upon his or her first conviction for driving without car insurance.

A conviction for driving without liability car insurance in Delaware entails at least 15/30/5 (that’s $15,000 in bodily injury liability per person, $30,000 in bodily injury liability per accident, and $5,000 in property damage liability).

How do I Save Money on Required Car Insurance?

Dr. Truman J. Martin’s inaugural car insurance policy back in 1898 would have cost him $316.25 in today’s dollars. Yet the average policy now costs $821.

You can come closer to the ideal such inexpensive insurance premiums if you do your research.

One technology that has exploded even faster than the price of car insurance is the Internet, and you can use it to your advantage. Online car insurance quote comparison tools make it easy to generate quotes, based on your specific situation and needs, from many different insurers.

Use our free tool be entering your zip code below and comparing quotes today!


  1. https://www.allstate.com/tools-and-resources/car-insurance/who-invented-car-insurance.aspx
  2. https://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/State-by-State-Minimum-Coverage-Requirements
  3. https://www.iii.org/fact-statistic/uninsured-motorists
  4. https://www.thebalance.com/penalties-for-driving-without-car-insurance-in-california-527033
  5. https://www.allstate.com/tools-and-resources/car-insurance/bodily-injury-liability-insurance.aspx

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