History Of Car Insurance

Car insurance grew directly out of an older idea: marine insurance, where traders paid a premium so a lost ship or cargo wouldn't ruin them financially. When automobiles started appearing on roads in the 1890s and early 1900s, insurers adapted that same basic concept — pool the risk, pay a premium, get covered if something goes wrong — to the new machines.

Who wrote the first policy?

There's genuine disagreement about exactly who sold the first auto insurance policy and when. Some accounts point to an unidentified British insurer around 1895; others credit the Travelers Insurance Company, based in Ohio, with issuing a policy in 1897 to a Dr. Gilbert Loomis, reportedly priced at $1,000 — a substantial sum at the time. Given how early and informal this period of the industry was, and that auto-specific insurers barely existed yet (policies were sometimes written by maritime insurers instead), treat any single "first policy" claim with a healthy dose of skepticism.

How it became mandatory

What's better documented is how insurance went from optional to required. As car ownership exploded — Ford's moving assembly line in 1913 put automobiles within reach of far more households — accidents and the lawsuits that followed them became a serious enough problem that governments stepped in. Massachusetts is generally credited as the first U.S. state to require drivers to carry auto insurance, in the late 1920s. The UK's Road Traffic Act of 1930 did something similar nationally, making liability insurance mandatory for all vehicle owners in Britain. Over the following decades, most other U.S. states followed with their own mandatory insurance laws.

AutoInsuranceQuery editorial team. Last reviewed: September 16, 2026.