Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

Full Bio →

Written by

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...

Full Bio →

Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 15, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Here's what you need to know...

  • The first insurance policy was designed to protect other types of vehicles, like ships
  • Herbert Stanley Morrison authored the Road Traffic Act in 1930
  • Travelers wrote the first liability car insurance policy in 1897

Some believe that the credit should go to Herbert Stanley Morrison. Because of the Road Traffic Act he authored and helped to push through in 1930, the US made car insurance a requirement in every state.

Other people credit Travelers for writing the first liability car insurance policy in 1897. While Travelers doesn’t take credit for this, according to Ohio History Central, which offers a documented his, this is the first known auto insurance policy written in the US.

Enter your zip code above and start comparing affordable car insurance quotes in your area now!

Table of Contents

How did auto insurance start?

While Travelers may be the first US insurance company to write an insurance policy, an unknown company in the UK wrote the first known car insurance policy in 1895.

The truth is, the concept of car insurance actually came from the insuring of other types of vehicles, especially ships.

In fact, before you could purchase an auto insurance policy, if you had an automobile prior to 1895, then you would purchase a policy from a marine insurance company.

In fact, many early automobile drivers purchased protection for their cars in this manner. This means that as early as 1761 it was possible to purchase insurance for an automobile.

This vehicle was invented by Nicolas-Joseph Cugnot and was used by the French army. However, the first “true” automobile was invented in 1885 by Karl Friedrich Benz and was the first car with a combustion engine.

With all that being said, it is truly impossible to say who approached a marine insurance company and asked them to insure their vehicle. That information appears to be lost.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption

When did insurance policies go into effect?

You can’t talk about who invented car insurance without considering the fact that there are other types of insurance that made car insurance possible at all. In fact, insurance has been documented as early as 2000 years before Christ was born.

The Code of Hammurabi was an insurance code for boats carrying goods. It is proof of the first compulsory insurance, as Hammurabi required that all merchants insure the goods on their boats against piracy and shipwreck.

Even before that, there were community groups that required communities to pitch in and help others when a loss occurred, either financially or physically (such as performing chores around the house and so on).

Anyone who didn’t participate was not accepted by the community and, if they suffered a loss, then they would receive no help from the community.

The Reasons You Pay The Car Premiums of Today

Fire insurance and marine insurance have been around for thousands of years. Marine insurance, specifically, was the first type of coverage available for a vehicle.

However, even when auto insurance became commonly available, most car insurance companies charged far more than what the average person could afford. Even as recently as 15 years ago, insurance rates were higher than they are now.

However, some insurance companies discovered if they offered different rates based on how a person drives they could get more customers because they were offering lower rates.

Some companies, such as Farmers Insurance Company, started out by specializing in specific types of insurance. Farmers, for example, only sold car insurance to farmers for quite some time before branching out to other kinds of auto insurance.

Specialty companies like this found that they paid out fewer claims because farmers typically didn’t travel much by personal vehicle. This meant that they could also sell insurance at far lower rates than other companies could.

These insurance companies quickly learned the downside was that there were only so many farmers in the country and that they couldn’t grow like other insurance companies could. There were new unspecialized drivers buying cars every day, so companies like these had to adapt or fail.

Fortunately, companies like this paved the way for discounts for people who drive less than other drivers and pay as you go car insurance.

How did car insurance premiums change?

Rates also changed when states began to assign insurance commissioners to regulate car insurance. The insurance commissioner’s job is to determine how much car insurance is required by every driver.

In these states, when you use a quote tool to find the lowest rate, you will find that the rates are very similar to each other. Over the years, the way that you compare car insurance quotes has changed dramatically too.

Although this really has nothing to do with who invented car insurance and more about how the Internet changed the way that everyone shops for car insurance.

You used to have to talk to a broker and they would find quotes for you, or you would have to call dozens of insurance companies directly and ask for a quote.  Today you will find that with quote tools, like the one we offer here, you can get quotes from multiple companies instantly.

Enter your ZIP code below now for your free car insurance quotes and compare the prices between several great companies today.