If you’re an insurer what can you do?
With the invention of the automobile in the late 19th century came the inevitable side effect of automobile accidents. As automotive accidents increased in frequency, it became clear that, unlike other torts, which relied on personal responsibility, there was a possibility that automobiles would need to be governed by laws because “[t]here was no way of assuring that even though fault was assessed the victim of an automobile accident would be able to collect from the tortfeasor.”
This led Massachusetts and Connecticut to create the first financial responsibility and compulsory insurance laws. Connecticut’s 1925 financial responsibility law required any vehicle owner involved in an accident with damages over $100 to prove “financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least $10,000.” This early financial responsibility requirement only required vehicle owners to prove financial responsibility after their first accident. Massachusetts also introduced a law to address the problem of accidents, but theirs was a compulsory insurance, not financial responsibility law. It required automotive liability insurance as a prerequisite to vehicle registration.
Until 1956, when the New York legislature passed their compulsory insurance law, Massachusetts was the only state in the U.S. that required drivers to get insurance before registration. North Carolina followed suit in 1957 and then in the 1960s and 1970s numerous other states passed similar compulsory insurance laws. Since the genesis of automotive insurance schemes in 1925 nearly every state has adopted a compulsory insurance scheme.