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The History of Home Insurance

The instinct to protect a person’s belongings has been around since the beginning of time. From paying for caravan protection in ancient times to modern-day homeowner’s insurance, the need to protect one’s investments spans across time and cultures.

Ancient Roots

The basic concept of insurance has essentially been around for thousands of years. Still in existence today is the concept of the community as an extension of the family. In the case of tragedy, the community as a whole comes together and provides for those affected. In addition, as early as 2000 BC (likely earlier), traders were known to pay handsomely for safe transport of valuable goods by caravan. Ancient Greek merchants frequently paid for bottomry, which is essentially insurance for cargo carried via ship.

Early Beginnings

Records prove that Roman Benevolent Societies existed as early as 600 A.D., covering the death expenses for paying members. Years later, England boasted many Friendly Societies to help pay for losses due to fire. In 1688, a humble coffee house opened in London and quickly became a popular meeting place for ship owners, captains, and local merchants. Soon recognized as the best place to find marine insurance, Lloyd’s Coffee House ceased the sale of coffee in 1771, becoming Lloyd’s Subscription Room where the First Committee of Lloyd’s was established. Eventually expanding to home insurance, this popular insurance company provides a number of types of insurance to this day.

Another Genius Idea from Benjamin Franklin?

Recognizing the need for protection for homeowners, Benjamin Franklin founded the “Philadelphia Contributorship for the Insurance of Houses from Loss of Fire” in 1752. Along with his fellow firefighters, Franklin modeled the company after the Amicable Contributionship of London. Despite significant fire protection measures and ample firefighters, the threat of fire was still a very real possibility and devastating to families. By providing this option to homeowners, Franklin allowed shareholders to band together and share the risk of fire while protecting their family’s financial future. Although initially, coverage was offered only for the building itself, renewable seven-year policies were quickly purchased by homeowners. This allowed for the rapid expansion and success of the company, which is still in business today.

The Birth of Modern Home Insurance Policies

In the late 1940s, U.S. insurance laws were drastically overhauled, allowing for the creation of modern-day home insurance. Following this legislation, the first comprehensive homeowner’s insurance policy was introduced in 1950. Prior to that, a homeowner was forced to purchase a separate policy for fire, tornado, theft, and personal injury. Unfortunately, early policies differed drastically from one another and were extremely difficult to read and understand. In fact, this problem was so widespread that in 1971, the Insurance Services Office was formed to sell simplified homeowner insurance policies to insurance companies.

Home insurance has obviously come a long way from humble beginnings, however, some individuals still long for the traditional community-based approach to insurance. Unfortunately, this approach is no longer feasible in modern society. Through a long process of evolution, modern-day home insurance policies provide essential coverage, allowing for the peace of mind of protected assets at an affordable cost.

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