A Brief History of Mandatory Car Insurance


Compulsory automobile insurance began in Switzerland in 1904. Eight years later Norway adopted it, followed by Denmark in 1918. In this country such insurance was first discussed in New Jersey in 1916, and by 1927 some form of mandatory auto insurance was under consideration in most of the other states.

In January, 1926, Connecticut put into operation a financial responsibility act. The following year the “Stone Plan” went into effect in New Hampshire, while Massachusetts inaugurated the first and, to date, the only, compulsory liability insurance law for car owners.

Maine, Rhode Island, Vermont and Minnesota also have enacted legislation somewhat similar to the Connecticut plan. These various methods of coping with automobile accidents and their accompanying problems will be explained in detail at a later point. In addition to the several plans now in operation, a number of alternative proposals have been set forth.

The Massachusetts system of mandatory liability insurance has served as the proving ground for the experiment of compulsory auto insurance. Interestingly enough the experience of the Bay State has been used to support both the pro and con arguments.

There has been considerable quibbling as to the original purpose of the law, some pointing to it as a failure-claiming that it has not reduced the number of accidents, others maintaining that the law was never intended as a safety measure but only as a means of insuring financial responsibility. It is charged that the administration of the act has become involved in politics.

The total effect of the difficulties raised in the operation of the Massachusetts law has been to divert attention, temporarily at least, from liability insurance to compensation insurance, if the temper and number of magazine articles and newspaper comments may be taken as a criterion.

It is not improbable that the fight over mandatory insurance may shift from the liability field to that of compensation, principally because of the precedent thought to be found in workman’s compensation insurance. However, the plan adopted in the future may not be purely either a liability or a compensation measure. The Connecticut and New Hampshire plans, as well as a number of other proposals, present ideas for consideration.

While the public mind has been much confused as to the meaning of the various proposals, those who understand the principles involved and who are taking an active part in the controversy seem to be needlessly far apart on certain fundamental propositions.

For example, there should be general agreement on the point that the prevention of automobile accidents should be the main purpose of any kind of legislation on this subject, for without accidents there would be no need for any form of compensation. However, second only to accident prevention, is the adequate care of the injured persons and of their dependents.

Therefore, a proposal for compensating the accident victim or his dependents should not be condemned merely because it will not, or does not, reduce accidents. Perhaps these two ends cannot be accomplished by the same measure.

Source by Stephen Povinelli