In today's world, insurance is such an expected and integral part of major financial decisions that it may seem like it's been around forever. Insurance provides important financial protection for people who own a vehicle or a home, and it also helps to financially support those left behind after someone dies. But, have you ever thought who came up with the idea?
With numerous inventions that ranged from the lighting rod to bifocals, it shouldn't be too surprising that Benjamin Franklin was also one of the forefathers of insurance in the United States. According to PBS, Franklin formed the Philadelphia Contributionship in 1751, which was the first company in the colonies to provide fire insurance.
Members of the Philadelphia Contributionship agreed to make payments that would be used if any other member fell victim to fire-related losses. In the first year, the contributionship issued 143 policies, which lasted for seven years, PBS reports. Not one insured property caught on fire during that time
Automobile insurance was a little before Ben Franklin's time, but he did recommend coverage that included crop and life insurance, as well as coverage for widows and orphans. Regardless of what type of policy Franklin proposed, the policies all ultimately had the same goal: to ease financial burdens that can occur when disaster strikes.
While most of us know Detroit as the Motor City, Cleveland and other areas of Ohio were at the forefront of automotive development in the late 19th and early 20th centuries. Gilbert J. Loomis holds the distinction of being the first person to buy an automotive liability insurance policy in 1897, according to the Ohio Historical Society. The policy, which was issued in Dayton, Ohio, protected Loomis if his car damaged property or injured or killed an individual.
From that point on, auto insurance slowly started to become more comprehensive. The International Risk Management Institute reports that automotive fire and theft insurance first became available in 1902. In 1912, the precursor to today's multi-line auto insurance plans was developing, as insurance companies began combining property, liability and fire coverage for cars into one policy.
Insurance policies have evolved since the Philadelphia Contributionship, but the basic principles behind the policies haven't changed much over the years. The Better Business Bureau notes that automobile insurance plays a crucial role in protecting consumers from the financial losses that car accidents can cause, and that losses from property damage, medical bills, legal fees and lost income add up to billions of dollars every year.
While Ben Franklin wasn't thinking about cars when he formed the first insurance company, his action proved that insurance products and services can provide much-needed peace of mind.