Jacksonville 6/5/2012 12:16:19 AM
News / People

Auto insurance is about protecting people, not horses

Edge Auto Insurance

For 115 years, operators of vehicles in the United States have considered it a good idea to carry auto insurance on their horseless carriages. The first policyholder purportedly was a Massachusetts man named Gilbert J. Loomis who in 1897 paid $7.50 for a $1,000 policy.



The Travelers policy insured Loomis against the eventuality of him running his home-built, one-cylinder car into a horse while traveling the road; such rude encounters were not unknown in those days. If Loomis had killed a horse or rammed into the side of a house, the property damage would have been covered. If he had bloodied his nose or broken his neck in the crash, however, he would have been on his own because personal injury insurance was a few years from being introduced. 


Insurance rates ranged widely in the early days because there was no actuarial basis for setting rates. That is, too few accidents and circumstances had been recorded to statistically predict risk. Not until the 1920s did the industry begin to find common ground and develop insurance premiums linked to actual experience.


Today, auto insurance customers in Florida and elsewhere operate in an entirely different market environment. A safe driver can benefit from the wealth of statistical knowledge that has been accumulated. This compiled information lets insurers project with some degree of accuracy what individual categories of drivers will do behind the wheel and insurance rates accurately reflect those actuarial projections. Good drivers=good rates.


On the other hand, the numbers also single out higher risk categories of drivers who history has shown are prone to drive more recklessly or otherwise experience more claims on policies. If you are a single male living in a city, for example, you often can expect to pay more than would a person of different gender and circumstances. However, individual safe driving records and low claims experience can reduce a premium differential over time.



The value of insurance has been demonstrated time and time again when drivers and property owners experience unexpected loss and are made whole. Accidents happen and every person in the end is powerless to prevent them. This is why government policies require vehicle operators to carry auto insurance and states closely regulate the industry.  In 2012, it is all about protecting people, not horses.