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Timeline
A drive through time: history of car insurance
Today, mandatory car insurance seems like an inescapable part of daily life. But for nearly 40 years after the invention of the motor car, drivers didn’t need to be covered
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1886
1925
Massachusetts becomes the first US state to pass compulsory automobile insurance legislation, marking it as a trailblazer among the 50 states.
At the same time, Connecticut introduces a law that requires drivers to prove they can pay for damage, but only after they’ve been in a crash. Carl Benz applies for a patent for his latest invention: a vehicle that’s powered by an engine. And, with that, the motor car is born.
Despite this, it wouldn’t be Germany, the country of Benz’s birth, that would be first to introduce mandatory car insurance for drivers.
1930
The UK becomes the first country to introduce compulsory car insurance when it passes the Road Traffic Act. Owners and drivers must now be insured for their liability in causing injury or damage to third parties when they’re on the public road. Germany introduces mandatory car insurance nine years later.
A drive through time: history of car insurance
1996
Salvador Minguijon Perez is granted a patent for an early form of telematics – an electronic data processor that monitors a driver’s mileage and driving manner, feeding the information back to their auto insurer. Soon after, Progressive Insurance teams up with General Motors to offer the first telematics-linked insurance.
2005
Norwich Union becomes the first company to offer ‘pay-by-mile’ insurance, even securing the UK rights to Minguijon Perez’s patent. The motivation was originally affordability, but, as climate change continues climbing the agenda, it soon becomes a means of encouraging people to drive less.
2020
UBI enjoys a surge in growth as consumers face the prospect of renewing their car insurance while working from home or under lockdown.
Today, some of the world’s biggest incumbent insurers – including Nationwide, Liberty Mutual, State Farm and Geico – all offer some form of usage-based car insurance.
