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Insurance Company: A Brief History and Definition

Written by Michele Wilmonen. Posted in Definitions Last Updated: 07/15/2011

Like all businesses, the insurance company started out small with one product and grew into the multiple product corporations that we know today.

Files of Insurance Company Products

Insurance companies sell many different types of insurance.

Insurance companies are now everywhere and unless a person has been living under a rock, they have been a part of all of our lives at one point or another.

But, if someone ever asked you what an insurance company actually is what would you say?

Most people would only be able to answer that it is a company that sells insurance. But, the history and exactly what these companies sell can’t accurately be explained in one simple sentence.

Insurance Company History

The concept of insurance has been around since 3000 B.C. and was started to protect goods while being transported from the seller to the buyer over the seas.

The Chinese were the first to come up with the idea of insurance and it was passed on over the centuries from one culture to another. Today we still have this type of insurance along with home, auto, life, burial and health insurance. Out of all the insurance policies that are available today, the auto policy is the one that is the most frequently sold.

In 1897, the very first of these auto policies was sold in Dayton, Ohio by Travelers Insurance Company. At this time when the automobile was first being introduced, liability insurance was not mandatory to have like it is today. It was a purchase that was made by smart vehicle owners to protect themselves and their vehicle if an accident were to happen.

It wasn’t until 1927, when Massachusetts became the first state to make carrying insurance mandatory for motorists. Over the years, many states followed suit and now it is mandatory to carry the minimum of at least liability insurance on your vehicle to be allowed to drive in all states.

What do Insurance Companies Sell?

Insurance companies sell financial protection for you in the case that the item you purchased an insurance policy on becomes damaged or causes damages.

In the case of auto insurance; insurance companies sell you liability insurance so that you don’t have to worry about paying for the damages or medical bills to a person that you hit with your car out of your own pocket. Comprehensive and collision coverage are available so that you don’t have to pay to get your vehicle fixed.

Other products car insurance companies sell to protect you financially:

  • Towing/ Road Side Assistance
  • Rental Car Coverage
  • Personal Injury Protection
  • Medical Payments
  • Bodily Injury Liability
  • Property Damage Liability
  • Comprehensive Coverage
  • Collision Coverage
  • GAP Coverage

As you can see an insurance company has more to it than just “a company that sells insurance.”

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Michele Wilmonen

Michele’s first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she’s earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

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