The first car insurance policy in the United States went to a Buffalo doctor named Truman Martin in 1898. He paid $12.25 for $5,000 in liability coverage and was more worried about horses than other car drivers. At the time, there were about 4,000 cars and 18 million equines sharing the roads.
Buying insurance has changed significantly since then. When you bought your first policy, you probably called one insurance agent or the company your family already used. There was not much choice, or at least no easy way to compare insurance offers, and the price was what it was.
Since then, the process of choosing and buying car insurance has changed radically. It takes 10 minutes today to shave hundreds of dollars off your car insurance; it is one of the easiest ways to slash your bills.
The insurance middlemen
From the early 1900s and for several decades, buying auto insurance meant going through an agent. The Model T put millions of Americans behind the wheel in the 1920s, and independent agents added car insurance to their arsenal. State Farm, founded in 1922, employed a network of agents who sold only State Farm policies.
Comparison shopping, in and of itself, is not a modern invention. The difference is who did it. You told an agent what you drove, and they came back with a price, or a short list of them, and usually a recommendation. The comparison and judgment both belonged mainly to them.
Direct to consumers
The first crack came early. In 1936, Leo and Lillian Goodwin started the Government Employees Insurance Company, later GEICO, and sold by mail straight to a target group: federal workers and some military officers. No agent, no office visit, and usually a lower price.
Direct selling stayed a niche for decades, and for most drivers the insurance agent remained the default well into the century. But the premise was set. You did not need a middleman to buy a policy, which also meant you no longer had one steering the choice.
24-hour insurance sales
In 1980, GEICO began selling and servicing policies by phone around the clock, coverage at any hour without leaving the house.
Progressive pushed it further in 1994 with a service called 1-800-AUTO-PRO. One call returned Progressive’s rate alongside the rates of up to three competitors, and you could buy on the spot. The comparison an agent once ran now happened in a single phone call, without the need for an intermediary.
Online marketplaces
In 1995, Progressive became the first auto insurer with a website, and by 1997, it was the first to let people buy a policy online in real time.
Marketplaces appeared almost as quickly. InsWeb launched the same year as Progressive’s site, gathering quotes from several insurers at once, though back then it mostly passed your details to agents who called you back. The frame of an online market was there.
Fast and furious
In 2010, GEICO became the first to let you both quote and buy from a phone. Comparison sites followed, The Zebra in 2012 and Insurify in 2013 among them, pulling real quotes from dozens of carriers in a couple of minutes.
The pricing behind those quotes grew sharper at the same time. Credit-based insurance scores had entered the mix in the 1990s. Telematics, the app or plug-in that watches how you drive, arrived to price you on your own habits.
Insurers now use machine learning to score risk and set rates, according to the National Association of Insurance Commissioners, and the comparison sites run their own algorithms to match you with carriers. The quote that once took an agent and a rate table now builds itself while you wait.
Save $1,100 on your car insurance
Truman Martin had one company and one price. You now have dozens of policies customized for your specific age, driving history, vehicle and needs at your fingertips. Insurers count on you being too busy to shop around when it’s time to renew. Insurify has fixed that.
Unlike other sites that sell your data, Insurify lets you compare real-time quotes side-by-side without the spam. It’s fast, secure, and rated 4.7 stars on Trustpilot. Stop overpaying today. It costs you nothing to check, and takes minutes.
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