May 13, 2022
  • May 13, 2022
  • Home
  • Car insurance
  • The rearview mirror: do you hate car insurance? Blame Ben Franklin

The rearview mirror: do you hate car insurance? Blame Ben Franklin

By on February 5, 2022 0
We all hate the cost of car insurance, even though we need it from time to time.

Don’t look now, but the cost of auto insurance is about to rise. For 2022, expect the average annual cost of car insurance to rise 5% to $1,707 from $1,663 in 2021, according to ensure. Similarly, S&P Global Market Intelligence reports that a handful of companies are raising rates from 3% to nearly 12%.

No one likes paying for car insurance, but it’s required by law and is a significant cost on top of your monthly car payment and all maintenance costs. Yet the origins of car insurance are almost as old as the country itself.

Thank you very much Benjamin Franklin

The Pennsylvania Gazette, published by Benjamin Franklin, who founded America’s first insurance company.

Auto insurance was created shortly after the first cars swallowed the unpaved streets of America. But it started as a result of fire insurance, an industry pioneered in the United States by Benjamin Franklin and the company he founded, The Philadelphia Contributionship.

At 18and Century, nothing frightened the townspeople more than the threat of a fire. Philadelphia has never known hell on the scale of 1666 Great Fire of London, Where Charleston fire of 1740, but the threat remained real. Franklin and his diary, The Pennsylvania Gazette, called for the creation of fire brigades, the first of which was formed in 1736. Others followed, as did fire insurance.

In 1752, Franklin, business leaders, and area firefighters came together to form The Philadelphia Contributionship to insure homeowners against fires. Insured buildings had a metal marker on them, and insurance plaques can still be seen atop many colonial-era homes in Philadelphia.

Cutting-edge cars breed cutting-edge insurance

Shortly after the appearance of the Duryea of ​​1893, automobile insurance was created, but it was not compulsory. (Photo credit: RM Sothebys)

The concept of insurance has become an inescapable part of American life, and given that the first American automobiles, including the Duryea and the Pope-Hartford, originated in New England, it is only natural that auto insurance also be.

The first policy was the creation of Travelers insurance company., founded in 1864 in Hartford, Connecticut. Travelers were already purchasing a variety of insurance policies by the end of the 19th century, including horse and carriage liability coverage.

But the company is soon adding a new line of business. Gilbert L. Loomis, owner of the Loomis Automobile Co. of Westfield, Massachusetts, developed a steam-powered car in 1897. Automobiles back then were new and original, but so was their technology.

Accidents are inevitable, as are the legal issues that accompany them. Flooded with legal troubles and looking for financial relief, Loomis asks Travelers Insurance to write a policy in case he hurts someone or something. The company did, but it’s written as a horse and carriage insurance policy – the idea of ​​a car insurance policy is still new.

Auto insurance industry revenue is expected to reach $316.2 billion this year and has grown 2.3% annually since 2017.

But Loomis set a precedent, and a year later, in February 1898, Travelers issued the first real automobile insurance policy to Dr. Truman Martin of Buffalo, NY.

Martin was a doctor when home visits were still common. He uses his car to visit his patients and worries about his potential liability in the event of an accident. The policy costs $12.25 and gives Martin $5,000 coverage in the event his car collides with a horse. Chances are good that he will. There were less than 4,000 cars in the United States at the time, but there were 18 million horsepower.

What happens next

Loomis never produces his steam car. By 1900 he had developed the Loomis Model No. 1, a 2-cylinder, two-passenger runabout which was not successful. Without his insurance policy, Loomis would be completely forgotten.

Other types of automobile insurance policies followed, including those against fire and theft, multi-line policies, and those offering collision and comprehensive coverage. It quickly became law for drivers to have it.

It started in 1925 when the state of Connecticut became the first state to require car owners to pay for any injury or property damage resulting from a car accident. But the law only requires drivers to prove their financial responsibility after their first accident. In contrast, the state of Massachusetts has gone further, requiring drivers to prove financial responsibility as a precondition to registering their car. This compulsory insurance law is something that we live now, because all states require it.

As for The Philadelphia Contributionship still exists, and is the oldest fire insurance company in America.

So if you hate paying for insurance, just throw a raspberry at founding father Ben. It’s all his fault.