February 29, 2024

Auto insurance is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle. Additionally it can offer financial protection against theft of the vehicle, and against damage to the vehicle sustained from events other than traffic collisions (keying, tree falling, natural disasters).

The modern car was invented in 1886, when German inventor Carl Benz patented his Benz Patent-Motorwagen. Historians appear split on when the first auto insurance policy was sold, with most of them claiming the sale occurred in 1897, when “The Travelers Companies” wrote the auto insurance policy to a man from Massachusetts named Gilbert Loomis.

Nonetheless, widespread use of the motor car began after the First World War in urban areas. In Y1930 a compulsory car insurance scheme on a country level was first introduced in the United Kingdom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties while their vehicle was being used on a public road. Later other countries also enacted similar legislation. In Y1949 the International Road Transport Association introduced “Green Card” – an international system of motor liability insurance for all drivers who plan to travel abroad in their cars. Currently, about 50 countries in Europe, North Africa and the Middle East are part of the Green Card system.