The first auto insurance policy was offered in 1897 by the Travelers Insurance Company. It was sold to Gilbert J. Loomis of Westfield, Mass. The cost was in the neighborhood of about $11, and it provided $1,000 in liability coverage. This equates to around 1% of premium to total coverage or 80 years to self-insure. For comparison sake, for liability coverage today, we pay about 0.5%, and it would take 200 years to self-insure. Add to that for this same cost we are insuring the value of the vehicle and the cost per $1,000 drops even more dramatically depending on the cost of the vehicle. So why, then, does it feel like we are paying more for our car insurance than ever? Because we are.
If we compare what we pay compared with what we get, the cost for auto insurance goes down, down, down. However, if we look at the actual dollars we are paying out of pocket, then we see the cost going up, up, up. The reasons for this are beyond the scope of this article. However, the low-hanging-fruit reasons include inflation, cost of labor, cost of cars and increases in claim frequency and severity. So if we’re writing bigger checks — OK, let me rephrase that, since likely some of you might not even know what “writing a check” means… Since we’re charging more on our credit cards in order to maintain auto insurance, what are we willing to do in order to pay less?
