- Originated by
- Lord Henry Heaton-Powis wrote the first known automobile policy (Britain, 1896); Travelers Insurance issued the first US auto policy in 1898 to Dr. Truman Martin of Buffalo, NY for $11.25.
- First formalized
- 1925 — Connecticut and Massachusetts become the first US states to require auto financial responsibility / compulsory insurance.
- Origin
- United Kingdom and United States.
How it came to be
Auto insurance is almost as old as the car itself. Travelers wrote the first US auto policy in 1898 — $5,000 of liability cover for a doctor worried about hitting horses. Massachusetts enacted the first compulsory-insurance law in 1927. The UK followed with the Road Traffic Act 1930. The IIHS was founded by insurers in 1959 to crash-test cars and reduce claims. Modern risk-based pricing using telematics ('black box' insurance) emerged with Progressive's Snapshot in 2008 and now spans every major insurer.
Key milestones
- 1898Travelers issues the first US auto policy to Dr. Truman Martin.
- 1927Massachusetts becomes the first US state with compulsory auto insurance.
- 1959IIHS founded by insurers to crash-test cars.
- 1995Progressive launches comparison-rate quoting, ending dealer-channel pricing monopoly.
- 2008Progressive Snapshot launches the first widely-adopted telematics insurance in the US.
- 2023EV insurance premiums spike as battery repair costs reset the actuarial model.
What insurance covers
Liability (mandatory in most places) pays for damage you cause to others. Collision pays for damage to your car in a crash. Comprehensive pays for theft, vandalism, fire, weather and animal strikes. Uninsured-motorist coverage protects you when the other driver is at fault and has no insurance.
What drives premium
Vehicle replacement cost, theft rate, repair cost (carbon-fiber Corvette = expensive), horsepower (insurers know fast cars crash more), your age, driving record, credit score, ZIP code, annual mileage and coverage limits. Multi-vehicle and multi-policy discounts typically cut 15–25%.
Cars that are cheap to insure
Minivans, midsize SUVs and Subarus consistently rank cheapest. They're driven by lower-risk demographics, have moderate repair costs and rarely get stolen. A Honda Odyssey can cost half what a similarly-priced sports car costs to insure.
Cars that are expensive to insure
Anything fast (BMW M3, Dodge Hellcat, AMG anything), anything that gets stolen often (Hyundai/Kia models in certain years, Range Rovers), and anything with carbon body panels. EV insurance has climbed sharply as repairers learn battery costs the hard way.
How to lower it
Raise deductibles to $1,000+. Bundle home/auto. Take a defensive-driving course. Drop collision and comprehensive on cars worth under $4,000. Shop every renewal — loyalty discounts are mostly a myth and rates can vary 40% between insurers for identical coverage.