Monday, October 27, 2008

History of Auto Insurance

This new type of insurance was created at the end of the 19th century. As soon as the first car owners started driving their quite mysterious at that time and newly-invented means of transportation a problem arose - it was absolutely necessary to provide peace of mind both to drivers and pedestrians. Thus car insurance was meant to protect them against any harm caused by car accidents which could put people's lives, health or property in danger. However at that time there were many insurance companies and such notions as health, life and property insurances had already been long in existence. So no one had to "reinvent a wheel" - they just had to apply those old principles to the new framework.

That's what TIC (Travelers Insurance Company) did in 1898 when it insured Truman Martin's car providing him with a coverage in the value of $500 and initiating the era of auto insurance.

Even though the first car insurance was actually meant to secure Truman's car from damage caused by horses rather than cars, twenty years later when transport facilities flooded big cities and required the invention of highway regulations, auto insurance was finally supposed to compensate losses caused by collision with other vehicles. That's when car owners were required to buy mandatory insurance coverage for the first time which little by little brought about some considerable changes in legal, economical and political systems in all the states of the U.S.

Auto insurance companies started spreading fast all over the United States and European countries as that new kind of business kept on growing at a blinding performance pace in the first half of the century. However car insurance was developing by fits and starts during all 20th century because in those days, as today, it was quite dependent of the condition and development of the car market itself in each country. Thus, every stationary period in automobile industry was followed by a material setback in auto insurance business. As soon as the car market experienced another sales slump, there were no clients to buy car insurance policies.

In fact that mechanism proved to be true not so long ago when high gas prices affected car industry and auto insurance business at the same time. However the relative stabilization of gas prices which we've witnessed recently is favorable for most auto insurance companies. This makes us believe that the period of decline in auto insurance development should be over by now.

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