1. Home
  2. blog
  3. questions

When Did Auto Insurance Become Mandatory?

Ashley Kane

The first car was invented in 1886. The tricycle-like car may have used gasoline and been able to move at a maximum speed of 10mph, but it sure wasn’t covered with car insurance. The first recorded auto insurance policy was sold in 1898 from Travelers Insurance and cost only $12.25. Nowadays, that equals out to around $300, a bit less than the average annual cost of $900 for car insurance today.

Auto insurance is required in nearly every state. It can be pretty crazy to think about when it was first implemented, considering how many years ago cars were invented. Yet, when did it become mandatory?

More: State minimum car insurance amounts

Car Insurance Becomes the Law

Mandatory car insurance is determined on a state-by-state basis, not through the federal government. Connecticut and Massachusetts were the first states to require liability car insurance in 1925, through liability and compulsory coverage in case of auto accidents. Drivers either had to buy coverage or show financial responsibility of at least $10,000 through cash, bonds, or stocks. If they failed to take any of these steps, their driver’s license would be suspended. Impressive forward thinking, right?

Later on, these policies changed into more recognizable forms of car insurance and in 1927, Massachusetts expanded upon the law for required compulsory coverage and changed it into mandated car insurance coverage. Drivers had to show proof of auto liability coverage before registering their vehicle. Soon after, New York and North Carolina had mandated laws in the 1950s and many other states followed with similar regulations through the 1970s. 

More: States that don't require car insurance

First Car Accident

The first car accident occurred in 1896 in New York City when Henry Wells of Springfield, Massachusetts collided with a bicyclist, Evelyn Thomas of New York. Wells spent the night in jail for the accident and Thomas went home with a broken leg. Car insurance could’ve been helpful then. As much as you may loathe paying your premium, there’s reason to be happy about car insurance!