A History of Insurance in the US

We have lived with insurance for so long that it almost seems like it has always been around. That has not been the case. Like everything, insurance started somewhere. Let’s take a look at the history of insurance in the US.

The first insurance that was established in the US was home insurance. In 18th-century Philadelphia, there was a legitimate fear of house fires due to the proximity and materials of the homes. Benjamin Franklin and his associates created the first American insurance company in 1752, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. An inspector would go to a property and determine if it had the necessary characteristics to be insured; if it was made of brick and not wood, and it did not have trees in the front that would impede the shorter fire hoses of the time. After making a decision to insure the home, the company chose a rate and wrote a seven-year renewal policy.

Life insurance would follow soon after. Again, Benjamin Franklin aided in establishing the Presbyterian Minister’s Fund, previously known as the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers, in 1759. There was some criticism by the church because they believed it was cruel to put a monetary amount on someone’s life. However, they were calmed once they found out it would help widows and orphaned children.

In 1850, medical insurance was established by the Franklin Health Assurance Company of Massachusetts. Their policies only covered injuries that occurred during travel, and they did not cover medical care. Instead, they only provided coverage for missed wages while one was recovering. Not necessarily the same as most policies present today.

Traders Insurance Company gave out the first auto insurance policy in 1898 to a doctor named Truman J. Martin. Massachusetts was the first state to require auto insurance before allowing registration. They passed the legislation in 1925 and were the only ones to do so for 30 years afterwards.

As the United States continued growing and changing throughout the 20th century, insurance became an increasingly important part of everyday life. New types of coverage emerged to protect people from the growing risks associated with work, transportation, health, and business. Government programs such as Social Security and Medicare also expanded the role insurance and financial protection played in American life. What began with protecting homes from fire had grown into an industry designed to provide security in many different areas of life.

We are constantly finding new ways to use insurance, but the most important remains the same. Insurance will always provide protection and comfort for the hard times in life.