A drive through time: the history of car insurance

Today, mandatory car insurance is a fact of daily life. But for nearly 40 years after the invention of the motor car, drivers didn’t need to be covered


Carl Benz applies for a patent for his latest invention, a vehicle that is powered by an engine. The motor car is born. Despite this, it would not be Germany, the country of Benz’s birth, that would be first to introduce mandatory car insurance for drivers.


Massachusetts becomes the first US state to pass compulsory automobile insurance legislation. 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. This makes Massachusetts a trailblazer among the 50 states.


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.


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 and feeds the information back to their auto insurer. Soon after, Progressive Insurance teams up with General Motors to offer the first telematics-linked insurance.


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 climbs the agenda it soon becomes a means of encouraging people to drive less.


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.


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