Hate paying for car insurance? Here’s who to blame

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Hate paying for car insurance? Here’s who to blame

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Car insurance was an outgrowth of fire insurance, which was started stateside by founding father Benjamin Franklin and city firemen. Photo by Metro Creative Graphics

You no doubt love the car, truck or SUV you drive. What you don’t like is paying the insurance to cover it.

After all, despite a lifetime of paying car insurance bills, most consumers rarely, if ever, actually make use of their policies. It’s a necessary evil required by law. But it’s also a major cost to consumers that’s been around almost as long as the automobile itself. Consider it the vegetables your parents forced you to eat so that you could have dessert.

Car insurance was an outgrowth of fire insurance, which was started stateside by founding father Benjamin Franklin and city firemen with the 1752 establishment of the still-in-operation Philadelphia Contributionship. The insurance plaques, known as fire marks, the organization placed on buildings’ second and third stories can still be seen on colonial-era homes in Philadelphia.

Car insurance came much later – almost, literally, by accident.

Thank the hapless Gilbert L. Loomis, owner of the Loomis Automobile Co. of Westfield, Mass. In his day, automobile technology was in its infancy, and accidents – no surprise – were common. In 1897, overwhelmed by legal issues that arose during the development of a steam-powered car, Loomis asked the Travelers Insurance Co. to write a policy that would cover any incidents of him injuring someone in an accident or damaging their property. It was a new concept; an automobile insurance policy had never been written.

Looms got his coverage, but it written as a horse-and-carriage policy. Nevertheless, he established a precedent, and one year later, on Feb. 27, 1898, Travelers issued the first true car insurance policy to Dr. Truman Martin of Buffalo, N.Y., according to the U.S. Census Bureau. Costing $12.25, it covered Dr. Martin for $5,000 if his car collided with a horse. You can’t blame the doctor. There were fewer than 4,000 cars in the U.S. at the time versus 18 million horses.

By 1900, Loomis had abandoned his dreams of steam. Instead, he was selling the Loomis Model No. 1, a two-cylinder, two-passenger gasoline-powered runabout. Unfortunately, his car was destined to be a mere footnote. If not for his insurance policy, Loomis would be forgotten entirely.

By 1902, other types of car insurance policies had been conceived, including those for fire and theft. As multi-line car policies and those providing collision and comprehensive coverage become available, it soon became law for drivers to be insured.

It started in 1925, when the state of Connecticut became the first to require that car owners pay for any injuries or property damage resulting from a car accident. The law required drivers who had been an accident to prove their financial responsibility. Massachusetts went further, requiring by 1927 that drivers prove their financial responsibility as a requirement for their car registration.

This type of compulsory insurance law is something we now live with throughout the United States.

Thanks a lot, Mr. Loomis.

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