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Prior to the advent of the automobile, the rapidly expanding American road systems were primarily used by bicyclists and some horse and buggy carriages. Being on public roads populated primarily with other vulnerable vehicles, many of the drivers purchased liability insurance, which were given in much the same way as a car insurance quote. However, the advent of the automobile would mark a paradigm shift in transportation that would not only require a mimicry of the older system, but it would render it obsolete altogether.
The first auto insurance policy was purchased by Dr. Truman J. Martin of Buffalo, NY in February of 1898. He purchased his policy from the Travelers Insurance Company of Hartford, Connecticut, who had just recently extended their policies previously covering horse-and-buggy vehicles and cyclists to the new gas-powered automobiles that were becoming popular among the wealthy. Dr. Martin was given a car insurance quote of $11.25, which covered him for $10,000 of liability damages. (Adjusted for inflation, this amounts roughly to a premium of $287 for a $255,000 worth of coverage).
Within three decades, the paradigm of traveler’s insurance had changed dramatically. The Model T and its successors had transformed the road system into an automobile-dominated network, and improvements to the automobile paradigm lowered the cost of insurance. By 1920, a driver could purchase liability, collision, theft and fire coverage for less than the amount (adjusted for inflation) that Dr. Martin paid for his first liability policy. By 1927, the automobile was so common that the first mandatory auto insurance laws were enacted in Massachusetts. The road began to resemble the more dangerous, power-dominated speedway we see today. Insurance policies covering bicycles quickly fell out of common practice, as the new paradigm shifted nearly all liability to the behemoth automobiles, and car insurance quotes were distributed like wildfire. At the same time, improvements in the production of these devices reached a level where all but the most savvy bicyclists could more practically self-insure against losses than they could through an insurance company.
